Is your DVD drive connected to the same IDE channel that your hard disc ?
Can you also provide a dump of what lspci say ? It is very strange because my developpement machine is also running a 2.6.7 kernel and one of my test burner is a LG 4160...

Do you have additional swap that the 128MB of RAM ? Maybe you could run a burn process with a term open executing 'top'. I suspect that when you experience your 'slowdown' it is because you do not have RAM left and your system starts to swap.