[robespierre]

The system disk is a 145MB Toshiba. I hope it can be brought back to life after being degaussed? I may need to low level format it to rebuild the bad sector map

Degaussing the drive (if the magnetic field really penetrated) would scramble the servo information. Most drives can't write their own servo information because it is by nature an analog signal. Typically the servo is written slightly off-track to both sides, so that when the head stack is centered on a track, the head reading the servo surface receives two overlaid waveforms with equal amplitude. That head may not have any write amplifier connected to it.
Most drives used a dedicated surface for servo, but a few used embedded servo information recorded inside the inter-record gap of actual data tracks. The latter prevents low-level formatting in most cases.