I should note that the ISA controller is an IBM 6181682. I'm still looking to find documentation on it, the only jumper is a single one marked P3 , and I'm not sure what it does, but I guess I'll try it closed (as I found it) or open and see (unless someone has other ideas).

Okay, that didn't work. I think P3 disables the controller on the card. So test results are like this:
Onboard controller off, ISA on, disk on ISA controller: boots up without errors. disk gives Track 0 unreadable /invalid media errors on format or dir using either the Gotek USB drive or the 3.5 inch floppy drive. Yes, I formatted the disks/usb sticks before hand.
other configurations such as using the on-board floppy controller for anything or leaving P3 open on the IBM ISA controller: 601 error which is "disk controller error" according to the Epson manual.

It's encouraging that it boots up to DOS off the HDD without any errors now, and when I try to do a format or DIR I see activity on the drive (also when I boot up) like everythings fine, except nothing I do on the floppys work. but it's also frustrating. And seeing the exact same behavior from both the drive emulator and actual 3.5 inch drives leads me to believe its the computer itself somehow. The dip switches are set to '1 floppy drive'.

If you've got a way to put files onto the hard drive other than the floppy drive, test out some sound on that system - the PCM audio should use DMA just like the floppy drive uses so you'll be able to tell if the DMA is working correctly or not. I had some fun trying to get DMA working on a 386DX motherboard: Re: What retro activity did you get up to today?

With the onboard controller or the replacement, do you hear the drive seek out/in correctly on startup? It could be that it can move the heads around okay and find track 0, but with no usable data because DMA is having trouble. That's what I had with mine at least and your problem sounds similar since both the original controller and replacement are having issues.

Hi - unfortunately I don't have a way to get new files on the hard drive short of pulling the drive and controller out of the pc and putting it in another and that's only if I find drivers for them. The old HDD uses a two ribbon cable system to attach to the controller card which I'm unfamiliar with. And the Epson diagnostics run from a floppy - not real helpful when the floppies aren't working. That includes programs to access and modify the BIOS. DMA could well be the issue, I just need to figure out a way to confirm it and or work around it.

EDIT: I should also note that every so often the HDD makes a noise remarkably like an FDD when the PC first boots - in fact I thought it WAS the FDD at first - and gives the dreaded (for Epson users, or at least this user) 1701 (or Enterprise) error, meaning that there's a controller error (really a problem with the HDD itself), meaning it's a fragile thing I don't want to risk finally dying by pulling it from the machine. It's also why I'd really like to get an FDD working, to image anything I might find on it. Such as the working copy of MS Works 1.0.

I do see and hear the floppy home itself during boot. I also see its activity light come on and hear the drive trying to read the disk when I do DIR, FORMAT, COPY, etc. This is with multiple different drives that test fine on other systems. The FDD system really does look like it's operating normally, but no data is being read.

According to the manual the Equity 1 came with a 360k 5.25", the 1E came with a 720k 3.5", like many XT's it will not work with 1.2Mb or 1.44Mb floppy drives without a special floppy controller with on board bios.
My Laser XT/3 natively only supports DD floppy drives like the Equity 1 series.....
added: never mind you mention it in other topic...

I worked around the issue. I have an ISA USB card - the industrial kind you can find vids on Youtube about. It works great for me, no problems, and lets me use a big USB drive, once the machine is booted up. I installed a XTIDE card and have a CF drive on it, and as a bonus I threw on a SAAYM sound card too that sounds awesome. finally, I swapped out the 3.5 inch Floppy for a Flashfloppy USB drive. The lack of memory still limits me somewhat - for example, I can't play bigger vgz/vgm files on it, but I can play smaller ones - but for period games and programs, it works great. I think I need to post some stuff in the collections area.