The drivers only tell Windows that it's capable of burning, otherwise it'll look just like any other CD-ROM to Windows.
Yes, it is possible to have a drive that won't allow Windows to boot, I've seen it more than once. I'd remove the power and ribbon cable from the drive first, boot into Safe Mode, then reboot into normal mode. If that doesn't do the trick, try doing a Step-by-Step confirmation boot. I've had those get me by a problem before, as well.
If you can boot into ME w/out the drive plugged in, then you may have a faulty drive. It may be that when it's initialized by ME's base CD-ROM driver, it's causing a conflict; IRQ or some such thing.
Also, try putting it on your secondary IDE channel.
If the system boots okay w/out it, but won't boot w/ it, take it back to where you bought it and exchange it. A new drive just may fix you right up.