Sounds like the disc itself isn't reading. If you're using a copied (backup) Windows disc, are you sure it's not a bad burn, or that it's bootable. I've seen people simply copy the .iso to a disc and try booting from it there before. That of course, would never work.
If it's a genuine disc, then check for scratches etc.
I know that some older BIOS's don't like to boot from USB devices, but from what you say, it's happening with the internal drive. Have you a third drive you can temporarily attach to your system to try?
Have you tried booting the system from another bootable disc, maybe your Ubuntu disc? This would help you eliminate the drive itself as the root of the problem.