I finally got back to this problem, I hope you're still watching...

I've tried a bunch of different types of CDs and DVD's. On a few of them I
can see folders, and the files inside the folders. On one I could read a
text file, but the rest of the them even when I could see a file I couldn't
read/view it or run it.

Looking at the Event viewer/System just now...Nothing generated in Event
Viewer even though I was trying to play an audio CD that had opened up WMP
and was flipping through the tracks, giving one split second burst of sound
then on to the next track.

I next tried a disk onto which yesterday I had burnt(with this Asus device)
a television program (I booted up the computer with a bootCD and the Asus
CD-ROM device worked absolutely normally). Using VLC all I got was a blank
window with the heading "select one or more files to open". The Event View
did produce a bunch of identical "warnings" that said: "an error was
detected on device\Device\CdRom0 during a paging operation". Strangely,
when I tried this disk a second and third time it didn't generate those
warnings.

After I hard burnt this television program, and two movies (on a different
disk), I played them and they played perfectly while in the miniXP from the
bootupCD. Thus it really seems that the device itself is working fine, and
the problem is restricted to the Windows XP installation.

I also tried (again) uninstalling the device in Device Manager, rebooting
the computer, but the nothing changed.