I want to show the direct limit of $(M_i\times N,\mu_{ij}\times id_N)$ is $M\times N$ where $M$ is the direct limit of $(M_i,\mu_{ij})$.
Suppose $Q$ be any $R-$ module. Let $\alpha_i:M_i\times N\to Q$ be a collection of $R-$linear maps. Then for all $i\leq j$ we have $$\alpha_i=\alpha_j\circ (\mu_{ij}\times id_N)$$ Now we want to define a unique map $\alpha:M\times N \to Q$ such that $\alpha_i=\alpha\circ (\mu_i\times id_N)$.
Now every element of $M$ is of the form $\mu_i(x_i)$ for some $i\in I$ where $x_i\in M_i$. So we define $$\alpha(x,y)=\alpha(\mu_i(x_i),y)=\alpha_i(x_i,y)$$
Now I need to show that $\alpha$ is well defined. This is where I am getting problems. Suppose $x=\mu_i(x_i)=\mu_j(x_j)$. Since $I$ is direct set, $\exists\ k\in I$ such that $k\geq i,j$. So $$\mu_i(x_i)=\mu_k\circ \mu_{ik}(x_i)=\mu_k\circ\mu_{jk}(x_j)=\mu_j(x_j)$$ since $\mu_i=\mu_k\circ \mu_{ik}$ and $\mu_j=\mu_k\circ\mu_{jk}$. Then $$\alpha(\mu_i(x_i),y)=\alpha_i(x_i,y)=\alpha_k(\mu_{ik}(x_i),y)$$and $$\alpha(\mu_j(x_j),y)=\alpha_j(x_j,y)=\alpha_k(\mu_{jk}(x_j),y)$$Now how to show that these two are equal
You can prove this general statement first
Then, since $\mu_k(\mu_{ik}x_i-\mu_{jk}x_j)=0$, there is some $l\geq k$ such that $$\mu_{kl}(\mu_{ik}x_i-\mu_{jk}x_j)=0 \in M_l.$$ I.e. $\mu_{il}x_i=\mu_{jl}x_j$. Hence $$\alpha_k(\mu_{ik}x_i,y)=\alpha_l(\mu_{il}x_i,y)=\alpha_l(\mu_{jl}x_j,y)=\alpha_k(\mu_{jk}x_j,y)$$ as you wanted.