You can always try using the built-in subprogram MISC/HddManager of uLaunchELF (aka: uLE).
This uLE HddManager is capable of formatting an HDD all on its own (only when given the 'Format' command of course), and then you can use the normal uLE FileBrowser to Copy+Rename your "mc0:/BOOT/BOOT.ELF" file so as to create an "hdd0:/__boot/boot.elf" file.
However, I am not sure if this will also make the modchip use the DEV2 file so created, but I think most modchips that support such booting also support its enforced use by pressing some gamepad button combos at boot (varies depending on modchip type).
One advantage of using uLE for this kind of work is that you can use the HddManager and FileBrowser to inspect the HDD content resulting from the format operation. So if there is something wrong with the HDD or its connections affecting its low-level formatting, you can then inspect the details of it better, than just getting that error message from a dev2 installer.
In all honesty though, I consider DEV1 booting from MC to be superior than DEV2 booting from HDD, for several reasons.
One such reason is that if a boot setup gets bugged I can just unplug that MC and insert another, with a backup setup.
Trying to do that with DEV2 setups is not very practical...
Best regards: dlanor