It should at least try to attempt to boot from the CD/DVD OS, no matter what, if there is a disc in there, it will attempt it.
Just to be sure, you put the CD in, then restart the computer, and get the same thing? Then when the error comes up, you put the cd in the other drive, and restart, and still get the error?
Are you sure you have the CD drives hooked up correctly? You may want to take out one of the drives, and only work with one of them first, for the install, just to see if that works.