I think it (Kodi) just does not pass the floppy-image directly to PUAE.
Same thing with m3u, which kodi probably thinks, is a media file and tries to play it with media player, but then fails.
I think correct way should be an m3u file containing the floppy image names, which is passed to PUAE.
This does currently not work in CoreELEC.
edit:
Game ROM images are in /storage/emulators for usual purpose.
And it works like open a game file there by game addons file browser, for which then kodi starts the right emulator (PUAE).
edit:
Actually, better try this unofficial retroarch addon, which has PUAE 2021 emulator available, and supports disk control menu, and some more options and features.
Kickstart-Rom Files go to
/.kodi/addons/script.retroarch.launcher.Amlogic-ng.arm/resources/system/