It may be work checking if windows has lost the secondary IDE controller. A while back, I had both the CD-ROM and CD-RW drive disappear out of the blue with the same problem.
To check your IDE conenction status, go into your device maanger. Open the section 'IDE ATA/ATAPI controllers'. Make sure there is at least one primary and secondary channel. If there are two primary chanells (for two IDE controller's onbaord), make sure there are two matching secondary channels. If so, go into the IDE channel's properties for the channel your CD-RW drive is on. Normally the CD-RW is on the secondary channel. Click the 'Advanced Settings' and make sure both sections 'Current Transfer Mode' settings are set to 'DMA if available'.
If the above doesn't work, another thing that worked for me, particularily if Windows XP gets stuck in PIO mode on a particular device is to uninstall the IDE channel your CD-RW drive is on and reboot the computer. When Windows redects the IDE channel, it tends to pickup the correct settings for the drive also.
If one channel is missing (happened commonly in Windows 98se on me), uninstall the BUS master for the channel that's missing and reboot the computer. Have the IDE driver disk handy if you do this.