I'm a bit confused on what you are intending to do. If I understand the concept correctly, you are attempting to install the Newton Software that came on a CD via floppy disks.
The Installer, like the Installer used to install Mac OS, requires that the installation folder be named exactly as it is supposed to be. Say you packed the Installer for AppleShare Client 3.7.4 in a folder named "ACS 3.7.4" for cases where reinstallation is required. It won't work, because the Installer is looking for a disk (or folder, sometimes) named "AppleShare Client".
The "Make A Floppy..." menu item will always be greyed out on machines that did not come with internal FDDs. EG. iMac, iBook, PowerMac G4, .... That selection is for writing disk images from the hard drive to a floppy disk. Since you're just copying software, just use Compact Pro to split it into 1.3MB sections and copy it all over, then decompress it. Alternatively....network it. There's a handy link in my sig which explains all this content and more.
The Installer, like the Installer used to install Mac OS, requires that the installation folder be named exactly as it is supposed to be. Say you packed the Installer for AppleShare Client 3.7.4 in a folder named "ACS 3.7.4" for cases where reinstallation is required. It won't work, because the Installer is looking for a disk (or folder, sometimes) named "AppleShare Client".
The "Make A Floppy..." menu item will always be greyed out on machines that did not come with internal FDDs. EG. iMac, iBook, PowerMac G4, .... That selection is for writing disk images from the hard drive to a floppy disk. Since you're just copying software, just use Compact Pro to split it into 1.3MB sections and copy it all over, then decompress it. Alternatively....network it. There's a handy link in my sig which explains all this content and more.