I have previously dual booted Win2K and Linux using the
NTLDR to boot both. Both systems reside on the same disk
hda in different partitions:

hda1; Win2K
hda2; Linux swap
hda3; Linux

I have used the standard convention of installing LILO on
the Linux partition instead of the MBR and creating a /bootsect.lnx
which I copy to my Win2K c:\ drive and reference it in boot.ini.

This has always worked perfectly. However, I now wish to place
my Linux system on a separate HD (hdb) and continue to boot it
with NTLDR. If I create the same bootsect.lnx from hdb and use
it, will it automatically recognize and boot from hdb or does it
only work if the boot sectors are on the same HD?

I've read several forum posts about dual booting but can't seem
to find one directly on point.

Any help appreciated

Should work.

Eric