Ok, I was able to format the zip drive using lido 7.56, but the process wasn't exactly the same as documented in the above link, even though I was using the same version of lido used by the directions. For example, it didn't ask me about the Eject on Reset.

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Thanks for the feedback. Different Macs and different OS versions create different user experiences

After the SE boots, it sees the zip drive, and I've got a system folder on the zip drive, but the SE won't boot from the zip drive. According to one of the tools that came with lido, the zip disk is set as bootable.

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Try reblessing the System Folder on the Zip cartridge. Boot from another disk, open the System Folder on the Zip cartridge and then close the window. This should rebless the System Folder.