I discovered something else quite interesting. The cd-rw burner is a Samsung SW-252S which, from what I've read so far, is a troublesome drive. Also, from Microsoft's website, I found article number 316529, which deals with "cd-r drive or cd-rw drive is not recognized as a recordable device".
I printed out the instructions, and sure enough, the registry setting for this Drive Type was a 1. I changed it to a 2 and exited the registry, rebooted and still the same problem. Would anyone agree with me that the drive seems to be the problem?