To use CD-RWs as rewritable media thay have to be formatted so that data can be added and removed (a bit similar to a hard disc or a floppy).
My CD rewriter came with software that enables this to be done (Nero V5 in my case). I know Thinkpads cpome with IBM's own version of the same thing, and I'm sure other members are able to suggest different option if you don't have Nero.
If you're using Nero... after installing an application (InCD is used with Nero along with EasyPacket Writing - or something like that) inserting a blank CD-RW disc will start InCD (or you can include it on your on start-up options). Go to "My Computer" and right-click on the CD-RW disc icon. You will see an option for "Format". If you want to use the disc a rewritable that can be added to and deleted from like a floppy you have to use the full format which takes about 15 minutes. In the options you will find a box for Mount Ranier format - I think it is ticked by default - this formats the disc in about a minute, but the CD-RW might not be compatible with other machines, but if you're only going to use it on the same machine its loads quicker.
Formatying CD-RW in this way reduces capoacity from 700MB to about 545MB - you can use the "Erase" option and then use a CD writing application to write to what is effectively a blank disc - this gives you what ammounts to a CD-R that you can erase and write again, but can't add/delete with.