It defiantly looks like the floppy drive was the problem. Now that I have removed it the Macintosh starts up fine.

I have given the floppy drive a bit of a clean up, as it was full of fluff and dust. I also made sure that the mentioned microswitch is free to operate.

I also think that it could do with some grease to lubricate the movements. We have some silicone grease at work do you think this would be suitable?

Thanks for all your help.