How do I use MS-DOS from floppy drive?

Sounds like your HDD had NTFS on it hence the prompt for a password. DOS booted from a floppy will neither recognize nor be able to handle NTFS. Suggest you boot to the A: prompt and run FDISK. Use that utility to delete the partition and create a new primary partition so you can then format the drive and load a new OS on this machine. An easier way to handle this situation is to download the ultimate boot disk (google it).