NWONG - addressing your first paragraph, are you sure about those laser settings? 500 ohms etc. usually fries the laser quick smart (if you use the PS2 daily) unless it's operating at a lower voltage (which it won't be).
What model PS2 is it? I assume your installer set the pots down.
This is the moment to get a new laser, I believe and set the pots to 1100 ohms.
Another thought - the Laser Azimuth adjustment is often sloppily set by Sony because there is latitude when reading pressed CDs and DVDs. You could optimise by getting the laser fully orthoganal to the disk.
As to DVD-R movies - I suspect these work because they don't stream i.e. load in the background. That's a guess though. Laser Azimuth adjustment is posted/buried somewhere in this forum or in the FAQ section of
www.ps2modchips.com