I've had the same problems with Windows 7 not formatting, reading, or writing from a floppy drive(internal). It's rather absurd that windows 7 has so many floppy troubles and XP can handle floppies without a hitch. I guess XP is still superior in many respects.
Why use a floppy?
Try and flash your BIOS easily without one...My newest MSI board shipped with a very old version of BIOS(newegg) and would not fully recognize the processor. Yes, some MOBO makers do make a tool, but most have high rates of bricking your mobo if the BIOS gets corrupted(MSI tool especially). And trying to flash with a USB is a long and drawn out process and usually does not work.
So I upgraded back to XP and I was surprised how much snappier(I know it's subjective) the OS is and now my floppy works!! However I still have Win 7 on dual boot so does anyone have any suggestions on a remedy for floppies in Win 7??