Don't worry about changing the config.ini.
Yes, rename x2_5035_v16plus_512k.bin to bios.bin.
Just FTP bios.bin to the HDD. Once you have flashed the X25035 to your chip, you can edit it (colors, blob, fan-speed) with configmaker (a free tool). Just make the changes on your PC then FTP them to your hdd with the tool itself.