If your mother sold the house that was her primary residence - she most likely did not have any taxable gain assuming she owned and lived in the house at least two-out-of-five years before the sale an d her gain is less than $250,000.
On CDs - as you was the primary owner - you owe tax only on the interest - please verify the amount of interest reported on the form 1099-int - http://www.irs.gov/pub/irs-pdf/f1099int.pdf
You will not owe taxes on the total value of the CD.
Please verify - the amount reported on the 1099-int and on which name the form is issued.
That is correct - the money you put - are your money and are not your income. The interest earned - is your income. This income is taxable when it is credited to your account - not when you take it out.
If the interest was credited in 2008 - is taxable o 2008 tax return; if the interest was or will be credited in 2009 - it will be taxable on 2009 tax return
The amount of interest should be reported to you on the form 1099-INT - http://www.irs.gov/pub/irs-pdf/f1099int.pdf
If you did not receive that form from the bank or misplaced it - just contact the bank and ask for duplicate.