Don't worry, the disks are probably fine! Here's some info on how to get your drive working with them.
Commodore's original A1020 5.25" drive has 40 tracks and cannot detect disk changes (with that drive, you need to issue a "DiskChange DF2:" etc. command in a CLI whenever you change disks).
Your drive is different. In 80-track mode, it acts just like a normal Amiga external drive. You could put in a blank 5.25" disk, format it to 880KB and use the disks just like normal Amiga OFS/FFS floppies. It detects disk changes, so you don't need to worry about that.
PC floppies have 40 tracks. Therefore when your drive is in 80-track mode, you need to tell CrossDOS to double-step the heads. You do that by using a different DosType line in your mount file. With a 40-track drive, you would have "DosType = 0x4D534400". For your 80-track drive you need to change that to "DosType = 0x4D444400". (In ASCII those DosTypes correspond to MSD\0 and MDD\0.)
With that change you should be able to read your PC disks correctly. So for general use (Amiga and PC disks), leave your drive in 80-track mode.
For certain other uses (e.g. if you try reading C64, Atari or Apple II disks using software on Aminet), you might need to set the drive to 40-track mode if the software doesn't have an option to double-step the heads.
When your drive is in 40-track mode, it double-steps by itself. You should change the trackdisk step delay when using the drive in 40-track mode. You could change it to 6000 microseconds. I think there's a program called SetTDDelay on Aminet which you can use.
Also, in 40-track mode don't try using Amiga floppy disks! Trackdisk.device will think the drive has 80 tracks so that won't work properly.
-- M
