I ran into the same problem when trying to flash the BIOS on a VAIO laptop. I had made a bootdisk using ME, and copied the flashing program to it.
But.. the Phoenix Phlash program that Sony wanted me to use didn't like the fact that io.sys or msdos.sys or whatever system files ME had copied to the disk were using some kind of an upper level memory manager (for the memory past the first 640k).
Sooo... I went the old way.
bootdisk.com is a great site that has images for old bootdisks. I downloaded an old DOS 5.00 boot disk... then copied the flashing utility to it. Finally.. it worked, the flashing program stopped complaining.
Hope this helps.