If it really an ISO and not a hard disk image, you need 'APPEND iso' (but then your file normally would have .iso at the end of the filename and not .img)
MENU LABEL Your own boot image here
Your help message goes here.
How much RAM do you have? You need at least as much as the size of the ISO (a bit more if you want to boot this ISO).
Download Ultimate Boot CD v5.0
Use Parted Magic
for handling all partitioning task: http://partedmagic.com/