HL-DT-ST (otherwise known as LG Electronics) are very strange about firmware.
The writer that was in my Dell Precision 650 from new was a HL-DT-ST GCE-8481B. I only had this installed as a stopgap, always intending it to be temporary until I fitted a DVD writer (which I did more recently - I fitted a NEC ND-2500A). I wasn't going to pay the 200 pounds that Dell wanted for a NEC ND-1100A.
Trying to search around for new firmware for the GCE-8481B drew a couple of interesting conclusions. There was later firmware (my drive had 1.02 - there were 1.04 and 1.05 kicking around) but a lot of recommendations not to install any new firmware on Dell OEM drives. There was a 2.something firmware available from the NEC site, but it was recommended only to install this firmware on GCE-8481B drives in NEC computers. Apparently in some markets the GCE-8481B supports Mt Rainier - and some were after that firmware.
Against that sort of background, I think you have every right to be worried about upgrading firmware on these drives. I've never known a manufacturer make things so difficult - and I've flashed far more expensive pieces of kit than a cheap CD-RW drive in my time.
If you do kill the GCE-8400B by a failed attempt at flashing it, then a replacement of better specification is unlikely to cost that much. Apart from one or two fairly special drives, like the Plextor Premium, good CD-RW drives are not expensive now. For, I believe, around US$120, you can get a good DVD writer.
In the end, I was glad to get rid of the writer - I felt it was cheap junk, and looking back, I paid Dell way too much (around 70 pounds) for it and the OEM copy of Easy CD Creator 5, both of which are now uninstalled and in my junk box. I didn't have enough drive bays left to leave the CD-RW installed - I chose instead to leave the rather good Lite-On LTD-163 DVD-ROM. The third bay is filled with a DDS-4 tape drive.
Can you post more details of the error you get, the software you're using, and what media you've tried (it would seem a good idea to try some different media, in case you have a media problem). It would seem more likely that if the problem is with the drive, it's a hardware problem rather than firmware - but this may be nothing to do with the drive.
I'd be surprised if the problem is bad firmware - particularly if the drive used to work.
It is, of course, frustrating that HP want you to send the machine in for repair (presumably your warranty is 'return to base') rather than sending you an exchange CD-RW drive. Under these circumstances, I think I could persuade Dell to change the CD-RW - but there again, most Dell warranties are on-site.
As I said - if you post more details of the error, media, and writing software in use, hopefully we'll be able to help further. With Nero, posting the entire log seems OK (do chop off the serial number if it's at the top of the log file, though!).