take a look at your floppy drive light? is it on all of the time? If so cable is backwards. Make sure that the red wire on the floppy cable is facing opposite the power recepticle. On EIDE cables, most people remember that the red cable (#1 pin) is always towards the power recepticle, but it is backwards for floppy drives (red opposite power recepticle).
also try this: go to hardware devices in system properties and remove the floppy drive. If is just corrupted somehow, it should rebuild it the next boot. But if it is truly hosed and windows cant detect it, it will ccontinue to be deleted after you reboot.
if all cables are installed correctly and its a new drive, im leaning towards a bad controller.