Ok, now I'm really sure it's the CD.......
I tried every possibility (jumpering), connectors, etc. and no luck whatsoever. The DVD shows up and works fine, but the CD is nowhere to be found.
I pushed one of the connectors so hard, that it broke 2 pins at the back of the CD. It still opens and closes when I reboot, but doesn't show up. At least I was able to back up my files yesterday!
Tomorrow I will bring the pc's original CD-ROM (which I recall never worked too well and that's why we changed it in the first place) and install it for the time being. I will see if it works and post the result.
And on Monday..... I will start looking for a new machine.... hopefully finding a nice, fine Mac. Going back to my origins!
If anyone still has any ideas.... I will appreciate them. Thanks everyone for the help, support and patience!