Well, if you get to the BSOD, there is NO problem whatsoever with the partition, (you already booted PAST the IPL).
Since you are running the whole thing from DOS, to solve the problem about active state of the partition you might want to review your WINNT.SIF, most probably you have some setting that "touches" the partitioning, which you can do before via batch.
Here is a seemingly unrelated topic that enumerates the steps for fdisking/partitioning from DOS:
http://www.911cd.net...showtopic=16713
Look here:
http://support.micro...kb/153742/en-us
also check this:
http://support.micro...kb/236086/en-us
(though I don't think it's your case)
More generally, google for "stop 0x0000006f 0xC0000034" (without quotes) usually it is a device driver that fails to initialize or a missing system file.
However there are a few reports that it might be related to an incompatible CD drive (which I read also as "non-original XP install disk" burned at high speed - ALWAYS burn install CD's at lower possible speed):
http://www.pcmech.co...ad.php?t=103439
If I were you I would try again
WITHOUT removing
"from nLite the option Update/Install from DOS", just to make sure that it is not caused by that.
jaclaz