If we are determined to read the disk, I'd start by physically inspecting it to see if there are any visible scratches, or any junk on the disk. Clean with a q-tip if needed and if possible. But 3.5" disks don't usually get much junk in them.
If the disk looks perfect, then it very well may be one of those cases where re-reading a bunch may eventually increase readability. For standard formatted disks, I often just use WinImage, try to make a full image, and just mash "R" to keep retrying. If you get a good read, be sure to save it. But on disks like this, it would not surprise me too much if the readability actually improves.
I would not use an LSL-120 for that since those have a different kind of head. Since this seems to be a standard 1.44mb disk, probably the USB drive should be sufficient, although a real FDC and drive would be preferable.
If disk images are downloadable from somewhere, you can also use Winimage to compare the disk. Or other tools to compare extracted files. If they are identical up to the read error, you are probably safe just re-writing the image. (Note that Windows sometimes messes with boot sectors, so those may be different).