BTW, I cannot select my burner either. It just doesn't include a "burn" option. You need to save it to the harddrive and burn it on CD using a buring program afterwards.
As to the floppy disk situation, my understanding is xp wants to see the media descriptor byte on the floopy disk, if its not there an error message is given. I found an old note on this for NT but it may serve for xp also. I have a bunch of floppy disks that will fail and cannot be formatted on my xp system.check here for disk media
When I try to format the disk I get the following error message Windows cannot format this drive. Quit any disk utilities or other programs that are using this drive, and make sure that no window is displaying the contents of the drive. Then try formatting again.
I would save the backup to your harddisk and burn it on CD afterwards using the windows burning wizard (i think you need to rightclick the file, copy to...)
This problem is really a pain..if your near a computer store ask for correctly formatted disks that will be accepted by xp. Take along a copy of the microsoft tech note. I have been meaning to do that myself one day because I got a whole box of these.