Yea, you would need the MS patch for win95 to get USB working (does your lappy have a USB port?). In addition you may have to hunt for extensions to the USB stack that support 'mass storage' devices. I found some unofficial updates a while ago that worked well for Win98SE; added native support for my USB floppy as well as USB HDDs.
If all you got is the Floppy for data storage/transfer could be a bi*ch. If you have a PMCIA slot I could hook you up with a network card, but installing the drivers would be hard, their on a CD. Could copy them to a disk and load them before the floppy dies totally.
Yogi

If you need a floppy drive, grab a USB one.. if you have USB.

USB was always a bit flaky in Windows 95 too... could be in for some fun times.

Way back in the day, I used a laplink cable to transfer data over the parallel port of my 486 laptop. Can't remember exactly but I don't recall any extra software needed, seems there was built in drivers in Win95?!? Something to do with the briefcase.
  As long as the HDD can still hang in there, just back up everything to another PC often.
Trying to find repair parts can cost more then finding a replacement lappy
Good luck, Yogi

This. So much this. And if the HDD kicks the bucket, replace it with a CF card to IDE adapter.

Screw that floppy drive. I would investigate other interfaces, like copying files over serial cable (using the copy command, or maybe interlnk/intersrv) and/or getting a PCMCIA network card. The only time you should really need the floppy drive is for booting the computer if the hard drive goes completely bonkers.

IDK what kind of floppy drive that is. Compaq sometimes used proprietary parts, and sometimes not. If it's not a proprietary drive and you feel like doing a bit of hacking around in there, you could replace it internally, otherwise I'm sure there are probably external options if you need.

Oh, and if it's Compaq proprietary, good luck to you sir. Some of the more unusual Compaq hardware is incredibly hard to find. It was hard to find back in the day, and it's even worse now.

So I got this sweet little compaq laptop running windows 95 that I use for fast tracker and sometimes adlibtracker2.
I think it might have an issue...

I am guessing this needs to be replaced or just never ever used again but I thought I would run it by you guys first. Any thoughts? Should I just get an external floppy drive and use that or is replacing it something that would be better?