I have a similar problem with Fedora Core 4 (FC4). I tried to install some packages with the utility on the first installation CD, but then when it tells me to put in CD #2, it won't recognize it. Every time I hit ok it says there is a problem and it can't recognize the disk. However, I can go into my file system manager (Nautilus) and doule-click on the CD-ROM drive (which happens to be a CD-RW drive) and it opens and I can read files just fine.
What's up with that!?
I have no idea what to do. Obviously the drive works fine and the CD is ok too.