Guys, I had exactly the same problem on commercial CDs, and just fixed it. Went to Sony's site (useless), but then found a great and very detailed site on disc readers, http://www.repairfaq.org/sam/cdfaq.htm#cdgicl
Bottom line, believe it or not, was that all I had to do was clean the laser lens!!! I used a drop of gin (probably not ideal, but I didn't have any isopropyl handy) on a cotton wool bud and carefully wiped the lens, and hey presto, it worked immediately on all CDs I've tried! Note that it didn't *look* dirty, but I figured I had nothing to lose. I wish all fixes were that easy!!
Good luck - I hope you're as fortunate.
P.S. Have you figured out how to play MP3s? Just use a stereo jack (3.5 mm) into the 'mix mic' input in the back, and keep the MP3's volume below half.
Nigel in Chicago, April 2008