your nearly right
you must also go into system class of service and allow the extentions class of service to fwd to an outside line

you must make sure that the ext is the only phone (or)port set to ring at the time the call is being forwarded

ie if you are useing ddi then point the incomming ddi to the ext and set the fwd this will then work
if you are using psdn lines and pointing the lines as dil 1:-n to the ext then this wont work
hope this helps a bit