as srsa_4c says, you were almost there when you had two partitions All you needed to do was copy all the CHDK stuff into the big partition so that CHDK could find it when it starts up .
and thank for all the help so far.
In the end I got it working in my own way and your advice has helped me get there.
This is the way I did it:
1) Use a partition manager to create a 16MB FAT partition (BOOT) primary active on the PC
2) Use stick to do its magic thus preparing the card.
3) Put the SD back into the PC and create a FAT32 primary partition (PHOTOS) using the remainder of the space.
4) Boot PC with Ubuntu USB flash drive.
5) Copy the CHDK folder from the BOOT FAT16 part to the PHOTOS FAT32 partition.
6) Lock the card and bingo!
Now, when I take shots, they are saved to the FAT32 partition.
If I want to copy the photos from it, I have VirtualBox with a Ubuntu Linux VM to access the FAT32 partition.
I know it is a bit cumbersome, but will save me from buying a new camera.
Finally I have to learn how to use the scripts.