You can backup iTunes purchases to a CD > iTunes: Back up your iTunes library by copying to an external hard drive
Open System Preferences > CDs & DVDs
Select iTunes from the: When you insert a blank CD pop up menu.
iTunes content cannot be recorded to a CD inserted into the optical drive if that's what you goal is.
Which brand are you trying? Macs are finicky about their media - so try a different brand.
If you can't insert a CD all the way, your Superdrive may be defective - I've had to have one replaced because the mechanism that pulls in the CD was broken.
And, as far as I know, you can still burn playlists to CDs - if you get the drive to work, here are some tips from Apple: