what could be the problem!!?

From description cover off, ignites, cover on doesn't, would lead me straight to the fan pressure switch.

However, if you are getting high CO readings it could be corruption in the flue seals (also stopping the fps from operating), check in the air intake test point with the boiler running (rather than the flue outlet test point), you should be getting O2 readings of approximately 20.9% on air intake.
Any less than this suggests the flue seals are corrupt and 'mixing' could be occuring in the flue, this would obviously warrant further investigation into the flue.

Hope this leads you in the right direction.

Carefree
October 2010