I just tried it now, and the order in which you add mods via MagicLauncher does matter. I tried adding ModLoader after already having Optifine added, and then adding BTW, and got errors.
I finally got an 'OK' from all three by removing all, then adding them in this sequence: ModLoader, BTW, Optifine.
Note: I tried what the others said, and created a new zip archive out of all the contents in the MINECRAFT-JAR folder and added that via MagicLauncher.
I'm brand new to BTW, so I can't say it's 100% working, but the game started up just fine and I was able to craft the earliest items exclusive to BTW, but am having trouble finding hemp seeds. Not sure yet if this is a technical problem with the installation or I'm just not playing the mod right.
hemp seeds are pretty rare, and they can be found by punching tall grass or hoe grass blocks.
also, climibing rope doesnt with optifine installed.