"This circuit uses Teradora FDD, but when using any other FDDs, the part of the circuit, where DRIVE SELECT and MIS logic returns READY is not needed."
"If your FDD drive, is not TeraDrive FDD, it doesn't have MIS and DRIVE SELECT lines"
The way I am thinking, ALPS TERADRIVE DFR723F04A floppy drive is a 3 mode drive (720K, 1.2MB, 1.44MB), and MIS most likely is some sort of media insertion notification, based on the diagram. Catch, of course, is, that 1.2MB mode is not a multiple of 720K, so the drive needs to be told (or needs to tell host PC), that it is reading 1.2MB floppy (since rotational speed of the drive will be different, and likely size of read blocks + blocks per sector allocation will be different too). Since majority of the PC floppy drives are 2 mode (720K, 1.44MB), is it possible, that a 2 mode floppy drive would just not have this circuitry?
1.2MB support in 3 1/2 drive is a 5.25" drive legacy, I'd guess?
Coincidentally, here is a fellow, that has ALPS TERADRIVE DFR723F04A floppy drive in a Sharp X68000ACE Xellent30s computer, which tells me that those drives were pretty generic things, albeit not working in PC compatible computers out of the box. This site seems to be saying, that if you solder on the 4 pin power connector at the indicated spot, you can use it with a PC (Just be careful not to short the +5V line).