Well, since I installed this morning, have not had any issues w/ the blank CD or the Radio. Have not tried playing a normal CD, but I think it will work fine. Perhaps you have a bad CD. On the first page of this thread is a link to download the software and burn your own Blank CD I believe.
Here is the link anyway:
http://legacygt.com/forums/showpost.php?p=379369&postcount=381