I have a Dell 1950 that doesn't detect the DVD-ROM either in the boot selection nor from windows server 2003 R2. It does seem to power up when I insert a disk. I've also tried a USB DVD-RW drive, which also spins up, but is not detected by the BIOS nor OS. Any suggestions would be really helpful at this point.
Does the optical drive show up at all in My Computer or Device Manager? In Device Manager, does it show an error? Do you have another drive (another server or even a laptop with a compatible drive) to test?