Another possibility, after reading techknight's and uniserver's suggestions, is that a weak 5V or 12V or -12V supply is preventing the drive from operating correctly, so it just outputs a constant 0 on its RD line. I would test this with the drive connected, so you can see the effect of the drive load on the supply. Connect your drive internally, then check the external floppy port 5V, 12V, and -12V voltages at pins 6, 7, and 5.