And if you let it initialize a disk, initialization fails? Have you tried connecting the floppy in another slot? The motherboard has two floppy connectors. Are you inserting high density formatted disks in a 800k capable only floppy unit?

Floppy disks can go bad too, so that the Mac refuses them.
I recall some cases were DOS could somehow format a 2DD with lots of bad sectors, but Mac would not even mount it.
I suppose you tried more than one floppy with the drive in question. If it is a 800k drive and you have only HD floppies around, a bit of adhesive tape, covering the hole opposite to the write protection slider, can make a 2DD of a HD.
(Not recommended for everyday use. )

In my case I had to clean and apply a spray that cleans contact after wiping several times and trying to reformat I got.
Another thing that helped me was reading that there is a lever near the hole to force eject and that sometimes gets stuck.

sounds like what my pb1400 was doing, and in that case the fdd was shot

You could just replace the fdd they aren't too expensive to get