It sounds like hardware. Is it still under warranty?
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Puerto - that does seem like a reasonable price for replacing a disc drive and the
replacement of it shouldn't put your music library at risk since those files are on
your hard drive.
And you have your music library and all your other files backed up in at least two
other places as well, right, just in case?
I want to emphasize Sfar's recommendation for backup. If you don't have a system in place, you need one. It's a fact that hard drives eventually die. OS X's built in Time Machine is an excellent choice. You'll need an external drive to make it work. Here's a link to the set up instructions: Mac Basics: Time Machine. By default, TM backs up every hour whether anything changes or not. This is totally unnecessary for a music server and it taxes the system. Unfortunately, Apple doesn't offer an easy way to change that frequency, but there is a nice piece of free software that allows you to make changes: TimeMachineEditor. Note: it only works with OS X 10.7 and 10.8.