Nah man, the floppy looking thing was just to emulate the look of the official Zip drive prototype that never released. It was a partnership Sega and Iomega, the creators of the Zip drive format worked on for storing more internet files and cookies for web pages and favorites ect. Just some type of addon that gave you more storage space than the typical internal flash memory of the console.
The Dreamcast Zip Drive was an unreleased add-on that was due to release in Autumn 2000. Co-developed by SEGA and Iomega, the device would give users access to 100mb zip disks to allow for greater storage space for browsing the internet and downloading additional game content like maps for Quake III Arena. The add-on connects to the Dreamcast via its expansion port and power input, requiring you to then power your Dreamcast using the zip drive’s power input. The zip drive also features a USB slot on the front which would have given users access to more peripherals that never came to pass.
But in the post above, a person bought the Karaoke unit, which had the same exact shell, gutted it, and modded a zipdrive to fit inside the space to look like the actual prototype.
I was just wishfully thinking that a person could rig up some type of USB y-splitter to use like it shows the official prototype had and connect it to a hard drive somehow to transfer data without having to take the damn thing apart to add games. This makes no sense really since honestly I know of no way to let a single HDD work both from USB and the SATA/IDE interface. Some sort of adapter would have to be developed. It was just wishful thinking really.