I need to make a correction.
The DVD Drive does not recognize a blank DVD as "full" rather it says "0 Bytes". So it thinks nothing is in the drive.

When I insert the blank dvd the drive description also changes from DVD-RW Drive (E:) to CD Drive (E:)

When I double click on the E: drive it pops up a warning box and says
“E:\ is not accessible. Incorrect function.”

What’s interesting is at the top of the warning window it says D:\ like it thinks the E drive is the D drive. Windows XP Pro is confused!

What I tried this weekend.
1. Started in safe mode. Uninstalled the dvd drives. Shut down. Swapped them. Set one as master one as slave (where before they were cable select). This did nothing.
2. Tried Microsoft's CD-R fix (MSFT article 316529). This also did nothing.
3. Disabled IMAPI CD burning
4. Reloaded Pinnacle Video editing software... and the dvd decoder. Still no success.

There is a program called inCD on my machine. I don't know what it is... other than the description you gave. What do you suggest I try with that? I'm running Windows XP pro.
I can't think of a single thing I did between when the burner worked and when it stopped recognizing blanks. It was only 1 day in between and I didn't get on the computer at all. It is possible that Windows performed an automatic update... but I can't remember.
ps. Nero is only useless when they send you a copy with your DVD burner that doesnt have the ability to burn DVDs! You have to buy and expensive add on! Thanks for your help.