What should be done with music CDs, especially if their owners, who are disbelievers, demand them back, given that Fatwa No. 51655 discussed erasing the tape?

If it is possible to erase the evil content from the laser discs and utilize them for something beneficial, then it is permissible. Otherwise, they must be completely destroyed. It is not permissible to return a disc containing evil content to a disbeliever (kafir), and there is no guarantee (liability) upon a Muslim if he destroys it.