Hmmm, I think you want to go about this a little differently. With hard partitions, you can't have the CF card host the upgrade files. With a brand new card, this is Rich's advice for initial CF drive setup:
Here is how i start over with a CF card that has no MBR:
Open cmd window
type: diskpart
DISKPART> list disk
DISKPART> select disk (id) (don't get this step wrong or you will wipe out something important)
DISKPART> online disk (if the disk is not online)
DISKPART> attributes disk clear readonly
DISKPART> clean
DISKPART> convert mbr (this might give an error, don't worry)
DISKPART> create partition primary
DISKPART> select part 1
DISKPART> active (if this is the boot partition)
DISKPART> format fs=fat label=(name) quick
DISKPART> assign letter (letter) (this is not necessary until you want to access it on the PC right away)
DISKPART> list volume
Once you've done that, use CiderPress to create three 32MB disk images, and save _those_ to the CF card. (With only 128-ish MB, you don't have room for four. 3x32 + 1x16, maybe.) You can also save the upgrade files to the root of that CF card. Then you'll be able to upgrade without any trouble.