IBM T42 Hard Drive Upgrade- What am I doing wrong?

I'd say what you need to do in this case is to re do the imaging process and just put the partition with windows onto the new hard drive first. after you have it successfully booting into windows then worry about the rest or if you have that external simply hook it up and copy+paste the data over that you have on the old drive. that would be my best advice

It's well known that you can only write a bootable drive for an IBM laptop, if the target drive is installed in slot #0 INSIDE (I.E. the target drive must be installed INSIDE the laptop in the destination location). Apparently when the drive is formatted, IBM uses 240 "virtual cylinder heads" for internal, bootable drives, and external drives always use 255. I guess the bios checks the drive formatting geometry and refuses to boot the drive if there are 255 virtual cylinder heads!

So put your source drive in a caddy or a USB enclosure, and have the copy software runs from a bootable USB drive or a CD drive (probably on USB).

After many hours of frustration tonight, I finally managed to make a bootable acronis USB Drive by having acronis create an ISO file, then running the YUMI program which can make any USB stick bootable, using an ISO file.