The problem with the Recovery/Rescue partition on the IBM T41 and similar machines turns out to be the way that IBM set up the Recovery partition. This varies with the date of manufacture and model of machine, but on my machines they have set up some code in the BIOS that makes the hard disc look about 5Gb smaller to the Operating System than actual eg 35Gb instead of 40Gb. There are some settings controlling this in teh Security section of the BIOS set up screens.
This "protected partition" approach all works OK while you have only Windows on the machine as the manufactturer intended, but when you install Ubuntu with Grub managing the dual boot, Windows thinks that there is some problem with the partition table and refuses to boot.
The simple cure I found which allows everything to work normally (including the using the blue IBM button to launch the Recovery Utilities at start up), is to go into the BIOS setup screen, Security section, and switch off the security setting on the Recovery partition. You are warned that this action makes this partition visible to the Operating System and thus it can be overwritten if you re-partition the disc with a partition editor. This has not proved to be any real issue for me.
I did not work out how to build the Recovery CDs. What I did instead was to get the specific hardware drivers and utility software for the T41 machines from the IBM/Lenovo download site, and used a generic XP/SP2 installation CD to install Windows normally, then loaded the required device drivers for chipset, WLAN card etc. This results in a nice clean installation.
My standard approach to setting up a machine for Ubuntu use is to have Windows installed first, on a small partition (eg 5 - 10Gb) with the rest of the disc free. Then I install Ubuntu and tell it to use the free area of disc. This automatically sets up Grub to give the dual boot menu at machine startup. Very simple and reliable.
The Windows and the Recovery partition only get used rarely now on the machines I look after, so it has become something of a moot point, and on a couple of machines, only Ubuntu is installed. The users seem to have made the migration across to Ubuntu quite happily.