When the burner that came with my PC crapped out, anytime I put a CD into the drive it would freeze and lockup under Win98. I was able to boot using the recovery CD's, for some odd reason (because I thought it was a software problem, this did not seem odd at the time) but after a while, it would not even boot from the burner. Bought the Memorex branded Liteon that was perpetually on "sale" (via instant and mail in rebates) through BB at the time and all my troubles disappeared, after installing it and tossing the original crappy HP one.
Edit: I should say, that I had some early signs that I did not heed and it sounds like your's is doing the same. The first sign was making bad packet writing CD-RW's that could not be read once files were written there. Then burning software (i.e. non-packet writing software) would lockup the PC, while trying to burn CD's, then came the point where I could not load a pre-written CD-R or pressed CD without locking up the PC. At that point I tried booting from the recovery discs and the rest of what I said above. This all happened within the span of 1 to 2 weeks.