Thanks for the replies, guys.
@Bubbaleone - Yes, USB booting is enabled. I can choose the external DVD drive from the list of bootable devices.
@corkyg - Yes, I am past that point of hitting F12 to select my external DVD drive. The Lenovo X1 actually boots to the dos A
and I can list the contents of the bootable portion of the DVD.
@JackMDS - My DVD is basically a Windows 98 boot CD + ghost.exe + .GHO file. As an experiment, it works on a Lenovo T61's internal DVD (I can get to the ghost application and choose the .GHO file) but when I use the external USB DVD drive with the same boot DVD on that same T61, it fails with the error I indicated.
Thanks for any more input!