Sorry, tens of millions of people have installed SP2 with no problems at
all. I have a DVD burner (I have 3 optical drives, in fact), and mine
wasn't hosed. Yours probably wasn't either.
What PROBABLY happened was this:
XP does not, in and of itself, support DVD playback. Not XP (original),
XP SP1 or XP SP2. To get DVD playback, you need a non-Microsoft MPEG
Codec. You probably had one from some other product, and if you have
one, XP will use it. But installing SP2 may have made it necessary to
reinstall the codec, it is, after all, a new operating system. But I'm
guessing that the DVD drive itself is fine, is still present in "my
computer" and will still see and access both CDs and DVDs (note
"accessing" them is not the same as "playing" them).
What I'd do now is upgrade to Windows media player 10, try the DVD
player to play movies, if it doesn't work, reinstall whatever
non-Microsoft DVD software you had, which will reinstall the codec.
This is probably the DVD playback software that came with your DVD
burner (Power DVD or whatever). Normally, this isn't necessary, but in
your case, for whatever reason, it apparently is.