To avoid playing around with the data cable, use the keyboard combination to suppress SCSI bus scanning during startup (Command-Option-Shift-Delete). After the Mac has booted, use SCSI Probe or similar to scan the SCSI bus (lots of disk formatters have this functionality built-in).

This trick can also be used to format hard disks that have boot level protection (eg Empower, MacPrefect).

The system error occurs because the Mac scans the SCSI bus even when booting from floppy.