Does this error happen when you install nwe software (any kind of ) or when you install Windows? I would say either the cd or the dvd drive is damaged.
There is a tool called IsoBuster (google for it). Try copying data from your cd / dvd drive using this tool. It may will output a better error message then windows.
I was getting this error with my HPDVD 630i (DVD writer) and HP instructed me to do this....
Go into your device manager->IDE ATA/ATAPI controllers. Right click on secondary and choose properties. Go to the advanced settings tab and choose PIO only for "transfer mode". I would ensure that your drive is connected to the secondary controller first though.
I'm not sure why this works, but HP tech support had me try about 5 things and this one finally worked.
HP told me on several occations that they have compatability issues with Nero software. He said 1 and 100 will work with Nero.