I have Win2k, and Chankast works like a charm on it. Not only does my self-dumped bios run with 90 fps at all time (although I think it's much higher) on my machine, any game I've got backed-up that works in Chankast runs with 40-60 fps, 40 being the points with only few games where certain DC features aren't implemented all that well yet. Impressive for an Alpha.
When I just extracted my dc_bios.bin from my DC through a serial cable, it did exactly the same as yours. I needed to also extract my dc_flash.bin (regardless of the fact that chankast seems to create a useless one) and put it with the bios file, to fix the problem you described. Plus, the DC logo that was strangly red, changed into a comforting blue as I'm used to with my euro DC.