If it used to work fine, I'd agree, a hardware problem. If it's always been
flakey, check your ribbon cable to make sure it's plugged in correctly. The
floppy manufacturers haven't been very reliable or consistant at marking pin
one (red stripe) on the drive. You can't trust the cut notch on the floppy
either (depending on the brand of drive). I had a cable plugged in backwards
(matching the notch on the drive with the cable). The bios saw the drive but
wouldn't read disks. I flipped the cable (after filing off the cable notch
mate) and everything worked fine.
I really hate 3.5" floppies. They're better then the 5.25 or 8 in disks but
CDs are so cheap now and USB drives seem to work fairly good. Personally,
I've didn't even install a floppy in my wife's or daughter's systems.
Mark H