The disc with only two slots is the one that keeps the guy pointed in the right direction. Generally unless the discs are totally kinked or bent or rubbing a lot they should work to keep the guy pointed in the right direction.
The LETA chip on the pcb is finicky. The power connector to the pcb tend to brown and fry and restrict voltage. To get the +5v to the pcb and to get the game to boot folks turn the switcher up. My completely untested theory is that the higher voltage wrecks the LETA. My 720 came with browned power connector and a similar problem as yours. It was bad LETA that I had to replace. The replacement went bad after a month or two. I replaced the power connector, turned the switcher voltage down and replaced the LETA again. I have been skating or dieing now trouble free for a couple years.
If the power connector is browned- replace it and check your voltage.
Dave at RAM controls has the optical encoder boards and he has been offering some great KLOV discounts recently. I would order a new optical board from him just to aid your trouble shooting. Like I said, if it's not the problem then you got yourself a spare.