By Master Slave I mean what are the optiocals set as, for example
HDD 1 -> Master on IDE 1
DVD Writer -> Master one IDE 2
Compaq DVD-ROM -> Slave on IDE 2
I would also suggest my above as the setup for you to use. also make sure never to mix an optical on the same channel as a HDD.
You can check your current firmware with Nero Infotool, should be there in the start menu under Nero ToolKit and you can check the drive drive settings under IDE configuration in Windows Device Manager.
I would try a different media just to see if it happens again. Some medium, even though popular and considered higher grade just don't place nice with some hardware.
If you had another PC you can throw this into it would be great to test to make sure the drive itself is not faulty.
Ohh and also disable the IMAPI service in XP, type start -> Run -> services.msc and you will see all the servies
Ultimately, you can assume the drive is no good and try to RMA it.