i tried freespire myself not long ago. i wasn't nuts about it, but it was ok. one nice thing about this situation, you can always go back to that disk if you have to.
i don't know how a windows 7 disk works, but an xp disk boots from the disk and there's a brief window where you have to press any key to boot from cd. it won't stay on that screen and if you were right there paying attention to it, you wouldn't have missed it. it sounds to me like it's not booting from disk at all.
did you by any chance change the bios to make the hard drive the first device in the boot order?
a couple of things that i can think of:
1. your bios is not configured to boot from cd first
2. your cd-rom could be defective/marginal