Is your drive refusing to recognize only CDs or DVDs as well?
Try playing a commercal audio CD and a commercial DVD and post back. At least one user has lost the ability to use his Liteon with CDs. Based on info from Liteon Tech support, the drive has two separate lasers, one for CDs and one for DVDs. It has been postulated that his CD laser went bad. I'm wondering if something similar has happened to your machine.