I guess we're in violent agreement
.... what you did is exactly what I was getting at. We do it all the time with Windows 2K/XP (we're an MSDN certified shop).... you make a FAT partition for DOS (or an older version of Windows).
XP can see FAT, FAT32, and NTFS partitions. DOS can only see FAT16 partitions. You can make partitions thru Windows, Norton, etc.... even using some manufacturer supplied utilities.
When you make the FAT partition, you can hide it or let XP see it. Basically, it's a storage area for your DOS/older Windows app (or a dual boot partition).
The magic is in the floppy ... it boots to DOS and sees the only partition it can see (the FAT)....
It's nice that someone took the time to help you with this, because it can be a real time consuming task ... I didn't mean to take anything away from him.
The technique will work with most older Windows and/or DOS applications (including TurboLink, DS, etc.) ...