Sorry Tony, it on the linked MS page.
init.txt is just
set varname=
There should be no carriage return or linefeed.
To create this file from the command line:
C:\>COPY CON INIT.TXT
SET VARNAME=^Z
I tried creating it on the file from within the batch file by using
echo SET VARNAME=>init.txt
but that creates a CR or LF at the end of the file. This mean that when you later concatenate textfile file onto the end of init.txt and copy them into varset.bat you end up with
set varname=
games
rather then
set varname=games
Sorry long answer.