I was only ever able to finish the game using a real Atari 800. I had an 800xl as a kid and was stuck at the exact point that you describe. I purchased an Atari 800 later in my Atari using life and was able to finish Heracles and Ali-Baba as well.
I'd look on ebay and pick up a genuine Atari 800. Nothing beats playing the games on the real deal anyway!