My IBM Think pad laptop had Toshiba DVD ROM drive. It is recognized in device option but not reading any CD and the error message is "Please insert a CD in the Drive".Please help. Is there any software problem or hardware problem?

Have you tried using a lens cleaning disc as laptop drives do get dirty quickly.

Try the help given in this link, even if you have not received error 31, this resolves this issues many times and will have no other "side effects" by doing these steps.

You can no longer access the CD drive or the DVD drive, or you receive an error message after you remove a CD recording program or a DVD recording program in Windows XP: "error code 31"