In Add software you have the option of installing w32codecs which I believe allows the ripping of mucic CDs. This will not install, you can choose it but the hourglass icon indicating that it is in the process of installing never goes away and CDs will not rip.
I recently did a fresh install of LinuxMCE 7.04. 12/14/07
Has the software been removed from the mirror, I chose the Georgia Tech mirror
W32codecs are for handling various windows video formats and have nothing to do with the ability to rip CD's.
Before using add software you must have external internet access all setup and working. Have you tested/checked this is the case?
When you say CD's will not rip... what exactly happens? If you want to rip in mp3 format you must do two things first;
1) Add the lame library to your Core
open the console on your core and type the following;
sudu apt-get update <return>
sudo apt-get install lame <return>
2) In Web Admin go to;
Wizard -> Basic Info -> Installation
Then set your ripping format to mp3 and your chosen bit rate and then click 'Save'
Now you should be all set to rip CD's