I own a similar Mega-CD 1 japanese unit. Mine's from the 1st batch which went to sale in late 1991. Since it's a year older than the SCDs we see arround, it was already showing problems in reading the discs ( I thought it was weak laser) but I got a US SCD1 apart and put it's laser on my mega CD. It was still dificult to read some originals (with scratches) and all CDRs ... Then I thought it would be the boards. I replaced the original power board with the SCD one and then it worked like a charm ... The next day I figured out why the original power/audio board was faulty. It was dry eletrolythic capacitors, that caused the power suply to be not good enough for the CD-Rom drive work properly.
This was about a year and a half ago, And I think I told about it here in SX (I used to hang here a bit in 2000). About 3 or 4 months ago it again gave me trouble with a dry capacitor, but this time it was on the audio circuit. I had only the megadrive sound, the PCM and CD-DA sound were completely muted. Again, changing one capacitor on the audio circuit solved the problem. I hope this hint help you with your problem. Also, NEVER use common alchool to clean CD drive lens as it destroy the polarization film that is printed on the lens. It MUST be isophropylic alchool. A KSS 240A (Sony) is a triple beam laser pickup (expensive model) so wasting one like that is not really a very good idea ...