rod14, does your #1 floppy disk work at all? Is there any way at all you can get the files off of your disk and put them onto your harddisk? If so, what you can do is copy all the files off of your floppy disk and place it inside of a folder and then run the install.bat from inside that folder. Once it's finished with that part of the installation, it will prompt your for the next disk, as if you had actually put in your floppy. In fact, you can get all the files from all four floppies and place them in a folder and run installation from there, w/o having to use floppies at all. I just tested it out on a hunch; it installed quickly and it WORKS!
Also, if your floppy turns out to be bad after all, despair not. Run Scandisk on your floppy drive, and in many cases this can fix your problem straight away. If you're on XP and you find Scandisk, let me know where it is cuz I can't find it.

However, in XP you can open the command line ( Start -> Run -> and type cmd ) and type the following:
CODE
chkdsk A: /F
and it will perform the same task as Scandisk and fix problems on the disk.
If neither works, reply back and we can figure out someway to help you out further.