It sucks that you have to download WAIK to use vLite - I'm pretty sure it's only one or two DLL files it needs from that package (or something similar). nuhi probably did it this way to avoid getting into redistribution trouble with Microsoft... I'm attaching the files I think are necessary here, try unpacking them to your vLite install folder. I hope it's not a problem posting them here, honestly I can't see the problem in doing so - but moderators, feel free to remove if you don't approve.
Wrt. bootsector getting installed if you mark partition as active, that sounds reasonable.