Check the sliding metal rods and check the reading head cable. And mechanical obstructions. There is something in the far end of your floppy drive head. Or the reading head cable is broken, but only comes out, when head is in the end on the drive.

There's a black tab that sticks out from the side of the drive head, that looks like it runs along a ledge on part of the drive open/close latch (presumably to lift the head when the drive is open), and there looks to be some wear on that ledge. Maybe the head being lifted slightly in the middle of its travel, causing problems for those few tracks in the middle. Or one of the rails that the head moves on could be slightly bent, causing the head to twist or bind slightly?

Thanks for the suggestions guys. I'll examine the cable and head movement in more detail to see if I notice something strange.

Theoretically is could also be that the stepper motor is wonky when the head is in that specific area.

Yeah, I wonder how reliable these are, not just the motor itself but also the metal "ribbon" thing that is attached to it. I have a few drives with worm drives and they work just fine to this day, but this is the only drive with stepper+ribbon I have, so I don't know how it compares to the newer ones.

I've never had problems with the stepper / metal ribbon drives. Technically they should be more reliable than the worm drive type. No having to worry about the worm drive wearing or having dirt/gunk/dried up grease.

Oh, yah know.. one thing it could be is that something is on the metal ribbon when it is rolled up at that location and is causing it to only be out of calibration right there.

If the drive can't read floopies it wrote to it's not alignment issue - could be head azimuth but it would have to be way off, that usually screws up everything, not just last tracks. IMHO you have bad head tension/pressure, it needs to be just right to work. Too little and the head will not be close enough (and will tend to bump up on even small media warps), this is usually the case. Too much and it can distort the signal. Start IMD, go to alignment and move head to the problematic area. Make sure you use a known good formatted floppy. Now apply a gentle pressure (with your finger) to the top head, see if that helps sector recognition. If so it's 100% too low head tension.

This can be due to warped mechanism, user errors during re-assembly after cleaning, or dirt. Rarely wear, I've yet to see a drive so worn out it would cause such problems, but that is also possible. Note that the head assembly should not rest on anything other than floppy once that is in and locked down. The small tab to the side is only to lift the head in open position and it can slide over the metal parts without floppy in drive, but otherwise it should not make contact (though the gap here can be very small, some drives specify as little as 0.2mm gap - just enough to slide a piece of paper between both).

Some drives also have some adjustment to the spring on the top head, you can try that too but in general it's just for fine-tuning. Read errors are usually beyond what it can fix and down to bent or assembled wrong sliding parts.