Is the switch going to the floppy cable?
So maybe it would switch floppy drive between A: and B:?

But why need that ? Maybe that was needed if the PC had no phantom floppy or something.

Or does the PC have both an 3,5" and 5,25" floppy drive?
If so, it may switch the drive order physically somehow.

So someone can software from A:, no matter what physical type the floppy was.
Some badly written software was hard-coded to look for A:.

Edit: The red light looks a bit like a push button.
Maybe it's a reset button?

Thanks for your answer. Unfortunately I do not have the PC in front of me and for all informationnI must rely on the seller. Anyway the red button seems to be no reset-item, but some led probably in connection with the on/off-switch nearby. The blue/white cable which is dead and isolated with black strip maybe was in touch with the missing hard disk which has been taken off, but still shows the mfm-controller card and the loose cables. But anyway it remains a riddle.

Thanks for your answer. Unfortunately I do not have the PC in front of me and for all information I must rely on the seller. Anyway the red button seems to be no reset-item, but some led probably in connection with the on/off-switch nearby. The blue/white cable which is dead and isolated with black strip maybe was in touch with the missing hard disk which has been taken off, but still shows the mfm-controller card and the loose cables. But anyway it remains a riddle.