Newbie ISO questions

My background:  I'm looking for a minimal distribution to use for a
VMware-based appliance.  DSL is too desktop oriented, LSF is too
confusing, so I've arrived here.  My target footprint is 200 MB, so I
can carry of copy of the drive image on a mini-CD, but the smaller the
better.

Anyway, I downloaded the 6.0.3 minimal-desktop-live ISO and was able
to boot it without problems.  However, I'm less sure what to do next.
The ISO boots to an X11 session running twm, which in no way matches
the SDE quick install description at
http://www.t2-project.org/documentation/installintro.html.  I've poked
around and can't find a copy of the T2 sources anywhere on the ISO
(although I realize that I can download them myself if I have to).
The SDE Quick Build instructions warn of a one to three day build
time, so I'm mostly just looking for reassurance before I start.  My
target architecture is the same as my build environment, so I don't
need to cross-compile.  Am I doing everything right?  Is there a way
to use the ISO to install to a disk, or do I need to do a build?  Are
there any "gotcha's" that I need to know about?

Thanks for any assistance.