Fortunately, there is nothing wrong with the Mac OS 8.5 CD or any other bootable system software or restoration CD distributed by Apple. All system software and restoration CD's produced by Apple pass basic integrity checks. These checks include verification of media integrity, "bootability" (if the CD is bootable) and all files are verified for accuracy.
Typically when CD's are mastered, they are produced from a master hard drive volume. In order to make a system software or restoration CD bootable, Apple uses a proprietary utility that prepares the Master volume with all of the necessary driver partitions. Many 3rd Party hard drive diagnostic utilities do not recognize these types of driver partitions and report that errors were found with the CD.