It will fit. 1.44MB is simply the unformatted capacity. Toss on the FAT-whatever filesystem and you get 1.38MB.

The IMG file you have contains everything needed to make it bootable, etc. Like a CD-ISO image, you can't drag-and-drop it onto the floppy and hope it works. There should be a utility to put that IMG on the floppy, so just use that and I'm sure it will work. You can't expect to drag-and-drop that IMG file and hope it works.

Anyways, find the utility that it came with to put it on the floppy, and it will work. Be sure to keep us updated.


Edit: Ironically, the best utility to do this is on Linux (basically what you're trying to install). I don't remember the name of it though... I think searching for Disk Copy or File Recovery here @ AO *might* find it, but it was a fairly old thread that it was mentioned... Something about low-level disk utilities...