2 things I could think of.
1st, loosen the case, especially all the screws by the floppy drive. Just get the case real loose and and try it. My first A1200 if you tightened the case screws too tight around the floppy drive area, it wouldn't read floppies. Very strange I know.
2nd would be to make sure the floppy drive cable is the right direction. I know it wouldn't boot if the HD cable was reversed, but can't remember about the floppy cable. (I'm sure I connected mine wrong at least once, I always screw stuff like that up :-) )
