Ok so card arrived today, and after some drama, the machine at least see's a floppy controller. Spins the drive up to seek, no more 601 error. Downside, will not boot 720kb diskettes... Till I figure out what is going on with the keyboard situation, kinda stuck with diagnostics.
Did manage to get Landmark Diagnostics working, and shows a pass for floppy controller, but fail on seek test. But it is a step in the right direction.
Its strange I have 5 XT compatible keyboards, and none of them reliably work for more then a boot or 2. Wondering if the keyboard jack needs to be replaced.
Also managed to find a good deal on a MFM+Floppy controller card (Everex EV-390). Will update thread after figuring out why keyboards aren't working.