I tried to use DriveInfo.IsReady, but it returns false if an unformatted floppy is in the drive.
If you insert an unformatted floppy disk in your floppy drive, the purpose would normally be to use that floppy drive with that floppy disk. The first step is then logically to format that floppy disk.
So, if you detect a non-ready floppy drive, you could try to format the disk, and if that succeeds, your floppy drive should become ready with a newly formatted floppy in it. If the format of the unready floppy drive fails, then there is no floppy disk in it, or the floppy disk in it is faulty. Then you can show a message to insert a floppy disk in the drive.