Alright, so small update:

All I've really changed is I've put the battery in as well as the power cable (I only had the PB plugged into the wall without the battery up until now). I don't know if that makes a big difference, but now it will boot up until the "Looking for disk" icon is displayed. I have my System 7 Install disks ready, but when I put them in the computer just shuts down and I hear a faint high pitched whining sound.

When I reboot the computer the disk icon will display before immediately shutting down again.

Also, I've got that burning plastic smell again.. uhh.....

Still no activity from the floppy drive. I think my problem lies here?

I'm really wishing I didn't mess with it earlier...