I'm having the same problem. And after sending an e-mail to LG they said I should take the drive to the service assistance.
It first stopped playing Dvds from Warner, I thought it was some kind of protection. Then when I tried to play one disk from a double DVD that I own. Disk 1 was 'igonred' by the drive and Disk 2 worked okay, so I thought, well I might have installed something that is causing this. Then I formatted the PC and now the drive won't read ANY of my DVDs, and I've tried DVDs region 1, 4 and 0. None worked. It only plays pirated movies.
I've upgraded the firmware to 1.05
To worsen things I found out it was the drive (after writing to LG) one week after the warranty expired. Now I have a bunch of DVDs that cannot be played by the drive, it only records data.
Well there's one thing that's different. When I first installed the drive (besides it being band new) I had Windows XP (no service packs installed) installed and during this time I upgraded to SP1 (started to notice the problem) and now to SP2 (and that's when it really stopped working). Could be it but I find it hard to believe it.