I already figured it out. Inside the emulator, I formatted a blank "disk", then on Amiga I binary edited it and inserted the XFD. It seems the ACE emulator is very picky about file sizes. Disk files MUST be 92160 bytes and cartridges must be 16384 or 8192 bytes.
I was running Montezuma's Revenge (both versions) and it runs much faster and better than emulating the C64 versions! Awesome! Thanks Commie!