In fairness the "holding down 2 to disable it" feature never worked for me on my Blizzard 1260, but works on my Blizzard 1230 in the same machine - perhaps certain versions of the board have buggy firmware?
It disables it very early on in the startup, as in before the early startup would even show up. I can confirm however that Settlers does indeed run on my 1260 without problems so should run fine on the 1240.
I'd recommend WHDLoad too, it lets older games work that don't normally work even on the bare A1200, it lets you install them on the hard drive to save them from being lost on fragile floppies, it gives faster loading times, and often offer bugfixes, trainers and other improvements/mods. It's free to try so give it a shot!
