Recursive "Default 404 (not found) page"

Just installed Drupal 5.1 fresh. Published a page (first one) and set it up in Error reporting, Default 404 (not found) page as:

http://mywebsite.com/?q=node/1

This is the content of the published page:

<iframe src ="404/404.htm" width="100%" height="600" frameborder="0" scrolling="no"></iframe>

It is also "Promoted to front page". On the front page it displays fine (some flash content). However, when viewed when called upon as an error page, it becomes recursive; Repeats itself redrawing iframes one inside the other. This didn't go on with Drupal 5.0 but rather worked as intended.

Can this be confirmed please? More importantly, what can be done about it? :)

Vladimir

ps. The IFRAME is crucial in this case because the flash animation must retain its exact proportions, but the flash animation is too wide for smaller browser widths and would mess with the layout in such circumstances.

pps. Here are screenshots of the error, using just plain text for the published page:

1. Frontpage: http://img408.imageshack.us/img408/6893/nimd4frontpagepf0.png
2. Error page: http://img201.imageshack.us/img201/3885/nimd4errorpageha3.png