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I think that rainbow cable is not a stock Lisa cable...? I wonder if that could also be a contributing factor?
Both of my 2/10s came with that exact same rainbow cable and they work great with the Floppy Emu, so I think it might be stock in certain systems.
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Since you are using MacWorks, try using the Floppy Emu's Macintosh mode (rather than Lisa).
I'm pretty sure you need it in Lisa mode even in MacWorks, right? Or at least that's how I have mine set up. I think the mode accounts for differences between the floppy controller hardware in the Mac and the Lisa, not differences between the operating systems themselves.
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On this point, If I want to setup Xenix, Uniplus Unix, or any other non-Apple OS, should I be in Macintosh mode or Lisa mode?
Going off what I said above, I always keep mine in Lisa mode and it works fine with every OS that was made for the Lisa, so maybe something's weird with your disk images!