I don’t know if it helps, but what I do in step by step nature simply for comparison (sorry if too detailed):
-I start with an Unwrapped model, UVs are all set but collapsed into the editable poly. The badge polygons are part of the mesh and share the UVs of the whole model, it’s the same as if you cut the badge polys aftewards.
-I select the needed set of polygons for the badge and apply Unwrap UVW to it.
-In the Channel panel I select the Map Channel 2. Max asks me if I want to Move or Abandon, I chose Move for convenience.
-I open the UV editor. Because I applied UVW Unwrap only to the badge polygons, these are all that shows in there. I go Mapping/Flatten Mapping and arrange the polygons to fit the square. I close the editor.
-Then back in the Channel submenu (with channel 2 still selected) I press Save and save the channel somewhere.
-Apply badge material (doesn’t matter if now or at the start).
I just did badges on my final mesh (previous one was just a test) and I can confirm that this method works with no problems and can be collapsed back into the editable poly. And I didn’t even expect I could use a single channel 2 for both badges on each side.