You've made things unnecessarily difficult for yourself.
It would have been far better to have installed BM into the least used of your Dualboot - ie 98 - that way you wouldn't have had the Boot Magic problem.
You should also install PM and DI into the 98 OS as well as XP - then you can operate on the inactive XP OS whilst remaining in Windows.Can't understand why you want to schedule image-making - it only takes a few minutes.
I'm not surprised you're failing to boot into XPTest - XP seems to associate itself with sectors of the drive and doesn't like being restored to 'foreign' territory.
No idea re the last point - never encountered the problem.