"It actually says there is no HDD in the BIOS, but when I switch back to the original CD drive everything is fine again."
"I could not locate any master/slave plugging like you normally see on drives for a regular PC, what should I be looking for in a notebook drive?"
NOTE that you may not be able to see the master/slave/cable select jumpers until you remove the hard drive from an enclosure installed over it.
From what I have heard, laptop hard drives have the jumpers too, because they can be connected as a slave on a desktop mboard for t-shooting purposes, if you also use a 2.5" to 3.5" hard drive IDE data cable adapter - the pinouts are identical - only the size of the connector is different. Your hard drive may have an adapter installed on the standard IDE socket to suit the data connection to the laptop. I have no idea whether a optical drive module for a laptop has the jumpers - I would expect that if no jumpers are apparent on the optical drive module, the optical drive is set to slave, or cable select but the latter requires both drives be set to cable select. You could try setting the hard drive to cable select if it's presently set to master or visa versa; mixing cable select and master/slave jumpering or settings on the same IDE connection can often result in one or both drives not being detected properly.
In addition, if the hard drive is set to master, some hard drive brand's models (e.g. Western Digital) must use a different jumper setting if certain other drives are set to slave on the same IDE connection and the slave drive doesn't use the same standard as expected by the standard master setting (an alternate jumpering for master with slave present). See the jumper settings for the hard drive model, and if it has an alternate setting for master with slave present setting available, try it.
"Is it done through software somewhere?"
As far as I have seen - No. Never.
It's possible the module is wired differently to the contacts that plug into the laptop, but since the module fits and drive works when the diagnostics CD is inserted, that's not likely to be the case.
You could also try looking up the optical drive module's info on the manufacturer's web site.