If your center square is cut at 1.75", the finished size is 1.25 inches. To make four 1/4 square triangles to fit the 1.25 inch sides, you would add 1.25 inches to the finished size, so that would be 2.5 inches. If I understand your problem correctly, then the instructions from EQ5 are correct. You are probably not sewing a scant 1/4 inch seam.
There is another problem here (again if I'm understanding correctly - which I may not be!) If you are attempting to put triangles all around a center square, then you probably shouldn't be using quarter square triangles, but should consider using HST's instead, so that the outside edges of the finished square will be on the straight of grain.
Adding triangles to each side of a center square (and winding up with a nice square block) is not as easy as it sounds. You could try paper piecing that part of the block. Some quilters make their QST's and HST's from larger squares and cut them down after attaching them.
It might help if you show us the block you are trying to piece. Sometimes there's an easier way...
Good luck!