Custom Page Template not working

Just installed a test blog. No posts except Hello World. Tried to create a custom page template which is literally a copy of index.php from twenty ten (I want front page to show custom post types only and the blog part to be on a seperate page).

<?php
/*
Template Name: Blog
*/
?>
<?php get_header(); ?>
<div id="container">
<div id="content" role="main">
<?php get_template_part( 'loop', 'index' );
?>
</div><!-- #content -->
</div><!-- #container -->
<?php get_sidebar(); ?>
<?php get_footer(); ?>

When I go to add page, the template drop-down shows the twenty ten default “one column no sidebar” template. But not the custom template.
I even copied the one column template and renamed it “biteme” and uploaded it to the themes directory. Doesn’t show up.

Obviously missing something simple and stupid.