Is it possible to remove/delete the file partition and resize the CD partition to equal the max size? Making it so that the OS only sees the CD partition. The current structure does not work on some older ICH7/8 based systems running AMBIOS. The BIOS will not enumerate past the first partition.
I couldn't get my Cruzer Micro to accept a CD size that left the data partition smaller than 128KB. This shouldn't matter, though, since the CD partition isn't really a partition; it's a completely separate USB device. With the CD partition activated, the USB stick becomes a USB hub with virtual disk and cdrom devices attached behind it. What's more likely is that your BIOS can't see devices behind a hub, in which case it shouldn't see either the disk or CD devices.
I also ran into this problem with my own BIOS only recognizing the file partition of the device. This is probably because the BIOS doesn't handle multiple LUNs, even though the the USB boot standards specify it should.
Sadly enough my effort in creating a device that only contains a CD partition resulted in a bricked USB stick. Because of this, and the fact that most modern BIOSes do support multi LUN USB drives, i stopped researching this possibility.