I second that. You should try using, if possible, another version of the Macintosh System Tools specifically tailored for that machine - anything from System 7.0.1 to System 7.6.1 should be ok. 
If you have any other working machine to make a floppy, you can find 800k and 1.4MB images here.
The question would be if the drive is still working at all - shouldn't there be an existing version of the System installed on the internal hard drive? If that isn't booting, it's entirely possible that the drive is toasted.