Yup, your optical drive is defective. If you are feeling adventurous I would say it's an easy DIY replacement.
From the ifixit website I have found the part you need:
MacBook 8x SuperDrive
And the ifixit take apart guide (assuming you have a Macbook Core 2 Duo):
Installing MacBook Core 2 Duo Optical Drive Cable
If DIY isn't your thing then I would (in my opinion) not take it to an Apple store because they do charge a premium for labor and repair. But they are usually the most reliable. So if money is not really a problem, go for the Apple store. But I would search around for an Apple Authorized Service Provider to see if they can do it for less.
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