i seem to be having a similar problem. model 2 as well.
my spindle was a little too low as well and it the laser would make a lot of grinding noises.
i lifted the spindle slightly with my finger and tested a music cd and it works good now.
it takes 1-2 sec to go to next song a little longer to skip over a lot of songs. 3 sec to load the cd at startup.
should i still open it up?

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