When a game is installed to the hard drive the majority of the game's content is installed, but the physical disc is still required, and needs to be in good condition to work, as the game still accesses it. Requiring the disc to be in the tray prevents game
piracy, ultimately. Installing a game reduces load times and increases ease of access for glitchy games.
If the disc is badly scratched, warped, or damaged the game will not play, despite the content install. Clean the disc with a soft/specially designed rag wiping from the center out. Use only a tiny amount of water on the cloth. If the scratches are deeper,
contact your local video stores to see if they offer a buffering service, as most chain rental places possess a disc buffer.