Ok.. I answered both of my questions myself. 

 I got to the point where I figured out why disklabel was failing.
Apparantly the system which sets up the floppy drive information
for the kernel sees 3 partitions on a floppy drive, and I couldn't
find a way to change that in a config file or anything. 
 I took the check for number of partitions out of the fdsetdisklabel()
function in fd.c, but then I got repeated
fd0: corrupted data track (0) error

(this is from memory, I don't know the exact wording of the error)

 Since this error has to do with the MFM en/decoding and what the
disk actually read and writes on a bit-level, I'd rather not fool
with it if I don't have to. Does anyone have a kernel with working
floppies (fdxa)? Which kernel is it?

Thanks
Mike Henson
henson@colossus.mathcs.rhodes.edu