What you describe works but if you want to boot from harddisk only, alternative bootloader 'grldr' will make life slightly easier. This is my boot.ini :-

Code:
[boot loader]
timeout=5
REM default=multi(0)disk(0)rdisk(0)partition(2)\WINDOWS
default=C:\grldr
[operating systems]
multi(0)disk(0)rdisk(0)partition(2)\WINDOWS="Microsoft Windows XP Professional" /noexecute=optin /fastdetect
c:\grldr="Knoppix(Linux)"
And this is my 'menu.lst' :-
Code:
######################################################
# GvR Sept 30th 2004
        color black/cyan yellow/cyan
        timeout=5
        default=0

title Knoppix on Internal HD (squashfs, normal)
        kernel /boot/syslinux/linux squashfs i915.modeset=1 lang=us apm=power-off nosound nomce loglevel=0 quiet dma noeject
        initrd /boot/syslinux/minirt.gz
        boot
title Knoppix on Internal HD (cloop, normal)
        kernel /boot/syslinux/linux i915.modeset=1 lang=us apm=power-off nosound nomce loglevel=0 quiet dma noeject
        initrd /boot/syslinux/minirt.gz
        boot
With the above I could menu select whichever I want to boot.