Any ideas or how to reset drive mechanism Controller.
... should I just get a new 400k rom…no error codes
The controller is part of the I/O board.
If the ROM were bad, then the ROM version (shown at the right end of the menubar when doing the self-test) would likely not display correctly (eg. not /88 nor /A8), and you would get an I/O Board error from the self-test. So I think, probably not the ROM.
One potential cause is a poor contact at the card edge of the I/O board or chassis. Removing and re-inserting the I/O board a couple of times may help. If it doesn't, inspect the card and socket for foreign matter/corrosion, same for the wide card edge connector that joins the motherboard to the chassis.
On the 2/10 I/O Board, the IWM is in a socket at A1 (top left corner), if a poor contact has developed in the IWM socket, I suppose it may affect the floppy without generating a self-test error. Re-seating the IWM in its socket may help.
If you've been switching back and forth between a real drive and the FEMU, perhaps something was plugged in backwards at one point... I don't recall if this is possible (perhaps all the connectors are polarized), and I don't recall if the consequences are known.
Does the I/O Board work fine other than the floppy behaviour?