Just a thought re the floppy drive....

In your first post you mentioned the floppy disk it was shipped with pops back out. Is this why you say it won't read a disk or have you got a disk to stay in now? If it won't stay in, then you can fix this floppy drive - it's all the old, hardened grease that's the problem. I fixed up two recently that had this problem; it took some time and patience but now they work fine.

Check the topic "Unjamming a 400K floppy drive" in the Compact Mac section. Equill provided a link that was very helpful in this regard.