I inserted a blank disk

When you install Toast, one of the install questions is whether you want Toast to recognize blank CD's or DVD's when they are inserted. If this was set to yes, then I believe this could override the OS acknowledgement and Toast will take over.

One way to check is to open up Disk Utility (Applications > Utilities > Disk Utility) once you insert a blank disc, if you see the blank disc, try using Disk Utility to mount it, than it will should show on your desktop.

If you want the OS to mount the disc all the time, check your Toast settings.

Check both the preferences in Toast but also under System Prefs-->CDs and DVDs...there is an option there to choose what the computer should do when a blank DVD is inserted. Probably Toast set that System Pref to "Open Toast" based on your install configuration.

The Finder Pref you refer to only determines if CDs and DVDs recognized by the Finder show up on the Desktop. This is only a display preference, not really a determination of whether the Finder is the primary app that will recognize a blank disc. The CDs and DVDs panel in the System Preferences is where you need to go.
if that doesnt solve ur issue... i wud recommend u to reset ur pram and smc.....
Resetting PRAM and NVRAM

1. Shut down the computer.
2. Locate the following keys on the keyboard: Command, Option, P, and R. You will need to hold these keys down simultaneously in step 4.
3. Turn on the computer.
4. Press and hold the Command-Option-P-R keys. You must press this key combination before the gray screen appears.
5. Hold the keys down until the computer restarts and you hear the startup sound for the second time.
6. Release the keys.

Your computer's PRAM and the NVRAM are reset to the default values. The clock settings may be reset to a default date on some models.
Resetting PMU on PowerBook or iBook computers In some troubleshooting situations, if resetting PRAM does not resolve an issue, resetting the PMU may be the next appropriate step. For information on when this is appropriate and for instructions on how to reset the PMU in your PowerBook computer, see Resetting PowerBook and iBook Power Management Unit (PMU).
Additional Information Resetting NVRAM in Open Firmware If your computer is Open Firmware-based (Power PC) and you are unable to reset NVRAM as described above, you may alternatively reset the NVRAM and Open Firmware settings using the steps in the Solution section of Message “To continue booting, type 'mac-boot' and press return”.
In some cases, an Open Firmware-based computer may not respond to the keyboard commands noted above, and may not allow starting up into Open Firmware by pressing and holding the Command, Option, O, and F keys during startup. If you are unable to get to an Open Firmware prompt (and your computer supports doing so), try powering on the computer with the power button held down continuously—as if you were doing a firmware update. This should force the computer into Open Firmware, allowing the steps in the article noted above to be used.
Contents of PRAM Some Macintosh computers may not have all the settings described below. For Mac OS X information, refer to Mac OS X: What's Stored in PRAM?

• Status of AppleTalk
• Serial Port Configuration and Port definition
• Alarm clock setting
• Application font
• Serial printer location
• Autokey rate
• Autokey delay
• Speaker volume
• Attention (beep) sound
• Double-click time
• Caret blink time (insertion point rate)
• Mouse scaling (mouse speed)
• Startup disk
• Menu blink count
• Monitor depth
• 32-bit addressing
• Virtual memory
• RAM disk
• Disk cache

with respect to ur SMC...
The System Management Controller is an integrated circuit (computer chip) that is on the logic board of the computer. As the name implies, it is responsible for power management of the computer. It controls backlighting, hard disk spin down, sleep and wake, some charging aspects, trackpad control, and some input/output as it relates to the computer sleeping.
Over time, the settings in the System Management Controller may become unusable, which can result in operational anomalies with the computer. Examples include not turning on, not waking from sleep, not charging the battery, or not recognizing the AC Adapter, among others.
Resetting the SMC is not intended for resolution of a stall or situation in which the computer is unresponsive. An SMC reset should not be necessary except as a last resort in cases where a hardware issue with the power management system is suspected. Performing an SMC reset resets the hardware power management functions.
For most situations, a restart is sufficient. If the computer has stopped responding, try each one of these steps, one by one. Test between each step to see if it has worked. If one step works, don't worry about the next one. You should only reset the SMC if you've tried all of the steps listed here and the computer still isn't working.

1. Force Quit (Option-Command-Escape)
2. Restart (Control-Command-Power)
3. Force Shut Down (press the power button for 10 seconds)

Only perform an SMC reset on the computer if none of the above steps resolved the situation. If this is the case, see below for instructions on locating the reset button or key combination for your model of computer. If your computer is earlier than the models listed here, see "Resetting PowerBook and iBook Power Management Unit (PMU)" or "PowerBook: Resetting Power Management Unit (PMU)".
MacBook (13 inch, Late 2008), MacBook Pro (15-inch, Early 2008), and MacBook Pro (17-inch, Early 2008)

1. If the computer is on, turn it off.
2. Disconnect the AC adapter and remove the computer's battery.
3. Press and hold the power button for 5 seconds and then release the button.
4. Reconnect the battery and AC Adapter.
5. Press the power button to restart the computer

Note: Starting with MacBook Pro (Late 2008) and MacBook (Late 2008) models, you may instead use the reset method for MacBook Air (below) to reset the SMC. All earlier models of MacBook and MacBook Pro must use the method described above, which involves removing the battery.
MacBook Air and MacBook Pro (Late 2008 and later)

1. If the computer is on, turn it off by choosing Shutdown from the Apple () menu.
2. Connect the power adapter to a working power source.
3. On the built-in keyboard, press (left) Shift-Control-Option along with the power button once.
4. Wait 5 seconds and press the power button to start the computer.

Note: You must use the keys on the left side of the built-in keyboard.
You should only perform an SMC reset when the MacBook Air or MacBook Pro (17-inch, Early 2009) has been properly shutdown. This prevents issues from occurring to the file system.
While the power adapter does not need to be connected to reset the SMC, it may be necessary in situations where the battery needs charging or if the computer has been without power for an extended period of time. You can also visually check the SMC reset by observing the LED on the adapter. It will momentarily turn off as the SMC resets.