For me it behaved a little differently, the memory got allocated by using function 48h, but then any malloc call would fail. Not delete or not see the allocated block, just return NULL every time. It did work the other way around, use malloc then my function. But it still prevents me from using it, especially as I did not realize fopen, fread... etc. also use malloc internally.
Its a disappointment as I wanted to make my TSR program small but using as little of the libraries as possible, using only the file fuctions, which I dont really feel like rewriting.