tanuki65 said:

7.1. I wouldn't run 7.5.x (7.5.4 is really cool, since it was released for a day/week) (Ask raoulduke) since it's so slow.

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I ended up putting System 7.1 and Update 3.0 on the machine which takes up only a few MB of space. Thanks for the recommendation!

register said:

Consider to upgrade to a flash memory card to SCSI adapter. Some options are ready available of you are willing to spend around USD 100. Such solution will provide a noiseless drive which might even give maximum possible speed. Please also have a look at this project.

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Although this is probably the best option, I'm intending to stick with a traditional hard drive for authenticity/sentimental reasons. I might look into getting a more modern SCSI server drive or something like that, but for the purposes of this thread I wanted to know if there is some way I can rehab any of the failed drives with the resources I have on hand (i.e., an LC III with a working 40 MB HDD).