Auto-insert notification is disabled for those drives. That is why the name doesn't refresh in explorer, and why Auto-Play (seperate from AIN, but dependent on it) doesn't start up.
I'm not sure what the registry settings are to control AIN, some CD-burning software has additional utility menus to tweak the Windows' setting for this. You could also, if you are trying to enable it, rather than disable, simply un-install the CD drive from Device Manager and let it re-install. I think it defaults to enabled.
Also, are you using stock MS IDE drivers on the controller that the drive is attached to? It might be true that other controller drivers might not pass through the information needed for media detection therefore AIN doesn't work properly.
During your testing/usage, did you have any CD burning software running in the background? Some of them, temporarily, also shut-off AIN and auto-play, to avoid problems while burning.
Good luck. I've had strange issues with optical drives in WinXP too, that I never had in W2K or Win98se.