Have you tried formatting a disk with the drive and then reading the disk?

I have found letting the drive "warm up" after like 10min or so sometimes work. Do an xcopy b:*.* c:\scratch/s for example and continue to hit retry. I have been able to recover files that way. I think that 5.25" drives in general are way more clunky and lose alignment over the years, especially the top head that moves up and down.

Anecdotally, I got one NOS from Ebay recently and had nothing but trouble. It seemed OK at first, but the 3.5" drive started having trouble reading the end of disks. Formatting them resulted in "bad sectors" that were not bad when reformatting on other drives. The 5.25" drive worked pretty well, but did have some problems reading at least one disk that another drive read fine (not terribly uncommon), and then crinkled the hub of one disk that I somehow(?) managed to insert incompletely before the clamp engaged. Still have no clue how that happened.

I took the 3.5" drive out and tried to replace it with another laptop floppy drive, but it didn't fit the mounting holes and faceplate, and didn't work anyway. So then I tried to remove the useless ribbon cable connecting the two drives so I could just use it as a 5.25" along with a normal 3.5" drive... and accidentally came in a little too low with the iron and melted the plastic shell around one of the head ribbon cable slots. The 5.25" stopped working after that, even though the ribbon could still be inserted. I briefly considered replacing the connector, but given all the other trouble I had with the thing, figured I would be better off without it.

So -- take it with a grain of salt. Some user error, lots of issues with what seemed to be a finicky piece of equipment... maybe I'm just unlucky, but I decided against pursuing another one. I'm using an Epson combo drive now that works pretty well.

On a related note, it seems Teac's later drives just did not hold up well. I have two late-model 3.5" drives -- one works.. okay. The other couldn't read any disk without errors no matter what I did. I have early Teacs, Sony, Mitsumi, and Alps drives that work fine. Also a Samsung that is obviously cost-reduced, and works... well enough.

Aside from that, 5.25 drives seem to be a little more fragile. I've lost two recently. An old Toshiba that I have some hope of fixing -- it worked for a while, but started acting up kind of out of the blue. Hoping I can clean its rails and have it returned to service. (Will have to take it apart to do so.) Another Mitsumi gave up after a recent earthquake. It was installed in my 386 desktop, which I was doing some work on, so I had it resting on top of a baby AT mini tower. Earthquake hit early that morning and knocked it off the tower. I found it sitting upside down on the floor -- having taken an NEC 84i SCSI CD drive along for the ride. The floppy drive refused to read disks anymore, but everything else survived with nothing but a few new dings and scratches on the cases. Not sure if that one's salvageable or not, but I kept it just in case.

Check your disks and look if you don't see circular scratches. When I first tested all my 5"1/4 disk drives, ALL my disks (10-20 disks) were bad ... but since I hadn't any other disk, I really thought all my drives were bad, but no, my disks were just rubbish and started to destroy themselves in my drives by pulling off the magnetic stuff that's on the disks. Later I bought many other disks, and I never had this problem with these, so that's definitely these disks having a problem, and not the drives. I also had that problem with 3.5" disks, but it seems more rare.

From my (small) experience, it seems 1.2MB disks are the most fragile, while 360KB disks are much more reliable. But your experience may vary depending on how they were stored, and whatever variable makes disks I buy dead when other people have bought tons of them in the wild with sometimes terrible storage conditions and still have none of these issues ...

Hm. My experience was a bit different here.
Back in the 90s, I had barely issues with 5.25" 1.2MB drives in comparison to 3.5" 1.44MB drives.
(In these times, my father and me often got ourselves 5.25" shareware floppies! ^^)

Perhaps the problems are with the disks really. I remember that when I got 360K disks from a family friend,
they were all in bad shape. Some had corrosion (?) on the surface.
This gave me a hard time making backups of some classic programs.

Hm. Another source for problems could be the fact that 5.25" drives often have got no dust cover.
They are entirely open. If the PC is located in a slightly dusty room, all kinds of smoke and dust are flowing through the case.

Edit: I also recommend trying another ISA floppy controller card before giving up.
Back in the 586 times, I sometimes had issues with the on-board controller in conjunction with 5.25" drives.
Perhaps it was because of the big drives requiring a different electrical signaling (stronger signals; higher voltage, etc.).

Edit: I think Deksor is right about storinng being an important part here.
Since my father worked in computer field back then, I was teached to handle disks properly (diskette boxes, disk sleeves, no magnets in reach).
That's why I do have little experience with the "normal" way of handling disks. Shame on me. hah. 😅

Edit: Another idea that comes up my mind.. Perhaps some of the capacitors or diodes on the drive are defective ?
I guess they are important for safe data transfer. Maybe recapping and/or checking them (multimeter, capacitance meter and so on) might give some clues.

FWIW I also have a TEAC dual 3.5"/5.25" floppy drive unit that won't read 5.25" disks. It's not the floppies as they work in my other 5.25" drives. In case you ever manage to make it work I'd be interested in hearing about it...