  We study the conformal field theory of the D1/D5 system compactified on X (X
is T^4 or K3). It is described by a sigma model whose target space is the
moduli space of instantons on X. For values of the parameters where the branes
can separate, the spectrum of dimensions in the conformal field theory exhibits
a continuum above a gap. This continuum leads to a pathology of the conformal
field theory, which explains a variety of problems in various systems. In
particular, we explain the apparent discrepancy between different methods of
finding the spectrum of chiral fields at certain points in the moduli space of
the system.
