Did you install Nero 9 by any chance?
Even if you didn't, and old version of InCD can cause this too.
The problem is upper/lower filters, they are screwed and thus your CD's are missing in action.
Run this tool inside windows: ftp://ftp6.nero.com/tools/General-CleanTool.zip
As for booting, change the boot order in the BIOS, probably set to harddisk first.
If that doesn't solve it, disconnect one of the CD's and test with a single one, maybe one is broken and hinders the other, but that is my last guess.