The diskdrive probably isn't dead, it's just VERY selective to what disks it wants to accept. I got a single disk with mine from the seller, and it's fully loaded with soundbanks. The drive definately doesn't sound healthy, but it works to load and save banks on that disk only.
Then I wanted more disks to make backup of my "holy grail"-disk. Asked around here, and got a stack of 720kB disks from a friendly guy in Portugal sent to me.
Not a single of those disks would format inside the synth. And they were the correct kB size. But yeah..one of the dangers of 80s digital synths is that they can have all sorts of problems that can only be fixed by changing a certain chip or whatever. And most synth techs refuse to even look at them.
Your MIDI issue is probably due to wrong settings in the program you use to send sysex files, more than the synth itself.
I assume you've read the manual? It is available from yamaha's website in PDF format. It's actually really good, taught me how to use the quite cryptic sequencer . And yes, those envelopes are a bit unusual at first.
My disk is a Sony MFD-2DD "double sided" floppydisk. Doesn't say what size it is, but I think its was 720kB, like old Amiga disks. Or maybe 800kB, which makes it one of those weird formats noone else uses. The manual should say what kind you need. How to get them is a different issue, though.