Sounds like the optical drive is empty, which your Mac normally ignores unless the internal HD is corrupted. Boot from your Install disk, jump to Disk Utility, and try to repair the internal drive(s).
You can also jump to Startup Disk from the installer, to make sure your internal drive is selected as the boot device.
Your Mac is behaving oddly - if one boot device is acting up, it should switch to another automatically. Or display a graphical error message if no suitable boot devices will mount. You may end up doing an archive & install before this is done.