I found that trick never worked myself and ended up using the DW trick as well...the only form I use from DW but it works ALL the time.
Code:
function MM_preloadImages() { //v3.0
var d=document; if(d.images){ if(!d.MM_p) d.MM_p=new Array();
var i,j=d.MM_p.length,a=MM_preloadImages.arguments; for(i=0; i<a.length; i++)
if (a[i].indexOf("#")!=0){ d.MM_p[j]=new Image; d.MM_p[j++].src=a[i];}}
}
Thats the format you want to use to preload the images. ALSO make sure the original code is in the head. It looks fine but needs to be in the head to work. Also specify javascript1.2 and surround it in quotes. 
Code:
MM_preloadImages('file:///C|/Documents%20and%20Settings/Apparition.BBS/My%20Documents/my%20web1/graphics/titlebg.gif')"
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