you should not be using a 1.2MB floppy unless you demagnetized it first (you know with those hand-held magnets R/S used to sell),
If the floppy was made in a 1.2 drive the 720 head will have trouble reading the floppy, because of the size of heads on a 1.2 being smaller, and tracks being closer together.
You should be using 5.25" DDDS floppies not 1.2 DSHD floppies anyways with your 2000 FDD as indicated in the Model 2000 Page 4 of the Technical reference manual.
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