I've updated the disk to use the modern Ozmoo interpreter instead, as I am doing with Ghosts. Feel free to download the archive once again and test if it works now on your MEGA65.
I am guessing something must have changed in the MEGA65. The old image was created by Deft, one of the MEGA65 admins. There is no chance it did not work and it definitely worked on our machines when we tested it.
PS: There is a slight chance that the error you are encountering, especially when trying to copy to a real floppy is related to your SD card being fragmented. That has nothing to do with the disk image itself but with the way you put files on the SD card. Regarding making a copy of it onto a real floppy, please refer to the MEGA65 Discord, as that has nothing to do with the disk image per se :)