OK. If you burn a normal CD, it uses the ISO9660 format. This is quite archaic and only allows you to use the 8:2 format, and very limited file permissions. Microsoft implement something called Joliet so that you can use long filenames and stuff. Linux uses RockRidge extension, that also allows long filenames and stuff, but also allows file ownership and things. These both sit on top of ISO9660.
I believe that PacketWriting (I think this is the term for Direct CD - it can be used on CDRWs and is often used on DVDs), however, uses the UDF fileformat rather than ISO9660.
Linux should recognise the Joliet extension by default (when you mount the CD), but sometimes the UDF thing is not recognised properly (on certain DVDs, for example).