OP again:
PC is a Pentium 166 non-MMX Compaq, so AT+ and has worked with a previous 5.25" floppy.
Current configuration on the cable is:
Motherboard ---- 5.25" (B:) ---/twist/--- 3.5" (A:)
The previous 5.25" floppy drive that was working is a Fujitsu M2553K-03B. It is jumpered as DS1 and has the "TM" termination jumper on. Which in the context of how it was setup seems wrong as it was in the middle of the cable, yet everything is working that way. The Fujitsu 5.25" floppy seeks on boot.
The only reason for swapping drives is that the Fujitsu is the wrong color for this case.
In this same cable arrangement, with the Teac set to D1, it is not detected by BIOS, does not seek at boot, but LED does briefly illuminated.
Same configuration but added the jumper IU horizontally as suggested - no change in behavior.
-----------
Now some tests with changing arrangements:
Removed 3.5" drive from the cable chain. Took IU jumper back out. Connected Teac as the only device on the very end of the cable (after twist), with jumper set to D0. When I start the PC in this configuration I get an error 601 - Diskette Controller Error. Same configuration but with D1, D2, or D3 selected - all result in no drive detected. LED light stays on the whole time.
Put the 3.5" back in. Motherboard ---- 5.25" (B:) ---/twist/--- 3.5" (A:)
Teac with D0, D1 , D2, or D3 - no 601 error, but 5.25 drive not detected; does not seek; A: drive still works.
I am not sure or clear about the terminating resistor situation on the Teac. But at the moment, no configuration I've tried makes this drive detect/work despite the LED briefly lighting in most of the configurations where it is in the B: cable position, or staying stuck on when it was on the A: