I suspect you may be right, and your CD/DVD Drive is either on the fritz, or it doesn't like Windows 7.
To test this, can I suggest you download a Linux Live CD such as Ubuntu Ubuntu homepage | Ubuntu
and burn it with another PC, and see what your PC makes of it?
Incidentally, as its a laptop, does it have any "built in devices" like a Card Reader or Wireless? They might also be causing the issue