Ok, I used partition magic 8 as the other program didn't want to register properly. made it active successfully (hiding the Z: drive). I repeated your steps in the recovery console - bootsect thing, but still no luck, it continues to stall on the press a key to boot from dvd. and with the xp drive enabled it comes up with BOOTMGR is missing. So it will only boot with the dvd in and the xp drive enabled. I did notice that it now thought the vista drive was drive C:
One quick question, when the V: drive was created it was made as a primary partition, that's the right way to do it? Also it was created with partiton magic 8 - could this be screwing something up?