I found more info regarding the USB floppy not being read at install:
SCO OpenServer Release 6.0.0 Late News
Following these instructions, I found that the USB port I plugged the floppy into was not working so I plugged into a different port. Then the floppy was read! Unfortunately, when loading the driver from the floppy I just go a new error: "Error when mounting HBA media". I tried a couple differnet floppies just in case it was a bad floppy.
So I'm back to where I was, I don't know if the megasas driver is being created properly from OS5.0.7.