I'm writing, as usual, from an iMac 500/1GB under Tiger 10.4.11, fully updated. I use that or the adjacent iMac/500 under Panther for all downloads, without problem. I don't suggest that you must download to a PC, and even marvel that you are not using the iMac. From there you could transfer by ethernet to your second PB 520 if you had an ethernet crossover cable.
Again, break the problem down to its parts. Can the target PB 520 read any floppy disk? If not, can you erase/format a floppy disk in the PB? If you eject and then reinsert that erased floppy, is the floppy disk mounted? Is such a floppy disk readable in any other Mac? If your PB's FDD reads its own floppies, and if those floppies are not read in another Mac, the PB's FDD is out of alignment.
If it reads any floppy shoved at it, but not those that you are trying to feed to it with your newly downloaded software prepared on a Beige G3 (three processor generations later than the PB) under OS 9.1 (all-PPC code), suspect that process. Even go back and read my comments about when and where to decompress and decode the downloaded software. 7.6 (some PPC code) on a 6100 (one processor generation later) is as good as you have available to try to approach the antiquity of your 68LC040 in the PB, unless your other PB 520 is in going condition.
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