What does the front of the cd say
exactly? That will tell us if it's a true MS cd or one that came from the vendor instead.
Your cdrom drivers are loading properly or when you put in a cd, it would say 'drive not ready' or a code error instead. So it's definitely something to do with the cd itself.
Another test for this is to put in the cd, type E: at the A: prompt and press Enter so you get to the E:> and then type DIR /W/P and press Enter.
That will give you a directory listing of what's on the cd and will confirm that the drive is working.