cdogg,
I thought it was implicit that the Win2k boot loader files were not on the primary partition (or primary boot drive) and responded as such.
But the core of your question: Does it make a difference if the OS installs are on partitions vs. different hard drives?
I suspect wolluf already answered the question. My attempt:
No, it makes no difference if the OS installs are on partitions versus hard disks. What makes a difference is that the newer OS requires on the active primary boot partition the loaders from the new OS. It also requires a proper boot.ini file.
This is the nice thing about boot.ini, it uses ARC paths. The ARC specification does not care if it is a partition or physical disk, as long as it is specified appropriately.
Earlier I suggested using under Win2k the XP Recovery Console floppy images for an issue such as this. For one reason you have bootcfg, which is not available (unfortuantely) under Win2k. The other reason is that you can use the command "Fixboot", which does not copy the loader files, but rewrites the boot sector of the active primary boot drive to accomodate the newer OS, and let you use boot.ini as the alternative.
Bill