As far as I can see on your photo the parity jumper is not set.
All old hard drives Apple used in these Compact Macs had parity enabled, same counts for the external CD-Rom drives.
Enable the parity jumper and try another formatter than Lido like Apple's Patched HDSC setup 7.3.5
All old hard drives Apple used in these Compact Macs had parity enabled, same counts for the external CD-Rom drives.
Enable the parity jumper and try another formatter than Lido like Apple's Patched HDSC setup 7.3.5