It's an emulator! That plays old LucasArts adventure games, along with a handful of other similar titles. You'll still need the actual disks/CD, of course. Unless you want to play Beneath a Steel Sky, because Revolution Software provided the source code. Oh, and Beneath a Steel Sky is available as a free download from the site. The emulator also supports Simon the Sorceror 1 & 2, Broken Sword, and Flight of the Amazon Queen, which is also freely available thanks to John Passfield and Steven Stamatiadis.
I know of several people who have had the lasers in their PS2s die. Is it still under warrenty? If so, contact Sony to get it fixed. Otherwise, from what I've heard, you're better off just buying a new PS2.