From Patrick Verner (The creator of PartedMagic)
QUOTE
I'm not in the multiboot cd business so I really never cared to see if it works. It seems a large number of people do this. It's not possible to boot 2.0 from a multiboot cd without heavy modification. I'll have a fix for this in 2.1.
If you want to fix it yourself, from what I can see its looking for a cd with a label of "Parted Magic" in /etc/init.d/rcS (extracted from the initrd). If you change that to the name of your cd and change the "12" in count=12 to the length of your cd label you should be fine.
Cheers
Edit... Looks like tuxpwrd on the PartedMagic Forums said much the same thing and has far more detailed instructions for those who want to give it a go.

http://partedmagic.com/phpBB3/viewtopic.php?f=6&t=7#p45