Try booting to the DVD. Put a bootable DVD/CD in it and set the CD/DVD as first boot device. You can use your install disk for Operating system - Just bomb out if it can read it. This will tell you if it is the drive or a operating system/software issue. If you do not have a bootable CD/DVD, go to a friends house and download a bootable ISO file for Memtest 86 and create a bootable disk - can verify it works by tring to boot from it on friends computer, or try next approach.
Best way is to put it in another computer. If you do not have a 2nd computer check a friend out and connect to his.
Two year old should still be good, Qualifier - Should.
The laser could be dead, but it could also be dust on the lens (Hint cheap lens clean) or it could be the mechanical positioning system for the laser. You said you reloaded the drive.
Did you go to Hardware and delete the CD/DVD drive and let windows reload. Did you reload software??