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That means that a CD is stuck in one of the internal trays. Do not try and load another CD, as it may get stuck too. Only way to fix this is to pull the headunit out and pull the stuck CD out.
Could be any number of things that caused this - CD player was loaded with a bent/damaged CD, heat warped the CD inside the headunit, CD has a label that peeled off inside, or the loading/unloading mechanism is toast or jammed up with dirt.
I have that happen from time to time with my 6-disc changer in my 2003 Matrix XRS - sort of a pain, but usually not too bad to get at the disc. Make sure you pull the power before you work on the headunit - don't do it with the battery still attached or you might have bigger problems on your hand.
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2002 Corolla S, 1.8L 1ZZ-FE VVT-i
2003 Matrix XRS, 1.8L 2ZZ-GE, VVTL-i (RIP)
2009 Matrix XRS, 2.4L 2AZ-FE VVT-i
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