Was able to resolve by downgrading bios from version 2.4 to version 1.7, but 
that's a workaround, not a fix.
A newer bios shouldn't cause MORE problems!

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Inspiron 1501: Both the Feisty Live-CD and Alternate Install CD hang after 
detecting cdrom drive as hda and loading Uniform CD-Rom Device Driver
https://bugs.launchpad.net/bugs/108258
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