New music will not sync to my iPhone 4, and music that was previously synced but was added to library through a CD will not play and has a red square and is grayed out.

I use iTunes on my family iMac, my iTunes, I believe, one update below the current software any my iPhone is on iOS 7.0.3. Music purchased through iTunes syncs correctly and will play properly. Songs that I have obtained through CD's, however, are now grayed out and have a red square with a circle around it. When I click on the song, it will cycle through my library until it can play a song. iTunes will also not restore songs that I have removed from my iPhone but are in the cloud. Is there any possible way to fix this issue? Everything has been working fine until iOS 7 and the new version of iTunes. Thank you for your time!

I am so relieved to hear that I am not the only one experiencing this! However, I am sorry to hear you are going through this as well. Lucky for me I am upgrading to a 5s which will be sent to me on Wednesday. I did stumble upon an article with tips on how to downgrade back to iOS 7, but I am EXTREMELY apprehensive about doing that myself. Here's the article link if you want to give it a go:
http://osxdaily.com/2014/09/21/downgrade-ios-8-back-to-ios-7-1-2/

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