HS125 FLT CREW SETS FL220 IN ALT ALERTER VICE 220 AS CLEARED. LOSS OF SEPARATION RESULTS.

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THE CAPT FINISHED THE AFTER TKOF CHKLIST AND THEN CONTACTED ZDV TO OBTAIN OUR IFR CLRNC. WE WERE ISSUED A SQUAWK CODE. UPON RADAR CONTACT WE WERE THEN CLRED BY CTR TO PROCEED DIRECT TO MCI AND TO CLB TO AND MAINTAIN FL200. I NOTED THAT THE CAPT HAD WRITTEN THE CLRNC DOWN WHILE IT WAS GIVEN. WE HAD LEVELED AT 17500 FT MSL AND I NOTED THAT AFTER COPYING THE CLRNC THE CAPT DID NOT IMMEDIATELY PUT THE ALT INTO THE ALT ALERTER AND INSTEAD MOVED HIS ATTN ELSEWHERE IN THE COCKPIT. I DECIDED THAT I COULD INITIATE A CLB AND THAT HE WOULD VERY SHORTLY DIAL IN THE ALT INTO THE ALERTER. I CONSIDERED REACHING ACROSS THE COCKPIT TO DO THIS MYSELF; BUT IN THE CAPT'S PRESENT STATE OF MIND; I FELT THAT I WOULD RECEIVE A LOUD REBUKE AND THAT HE WOULD BE SETTING IT VERY SHORTLY ANYWAY. I GLANCED OVER AT THE CAPT'S NOTE PAD TO VERIFY THE ASSIGNED ALT OF FL200; SELECTED VERT SPD MODE AND DIALED IN 1200 FPM OF POSITIVE CLB. I THEN PROCEEDED TO RESET MY ALTIMETER TO 29.92 FOR THE TRANSITION TO FLT LEVELS AND CALLED OUT '92 SET TWICE ON THE L.' ZDV CALLED 'TFC; A DASH 8; AT 1; NO 9 O'CLOCK POS 1000 FT ABOVE.' I LOOKED L TO OUR 9 O'CLOCK POS AND ACQUIRED THE TFC VISUALLY AT OUR ALT AND MOVING BEHIND US AT A DISTANCE THAT APPEARED TO BE ABOUT 4-5 MI. THE CAPT; LOOKING AT HIS TCAS; COMMENTED THAT IT WAS STRANGE FOR THE TFC TO BE AT OUR ALT AT WHICH TIME I REALIZED WHAT HAD HAPPENED. I LOOKED AT THE ALT ALERTER AND SAW FL220 ENTERED AND IMMEDIATELY POINTED AT IT AND INFORMED THE CAPT THAT WE WERE SUPPOSED TO BE AT FL200. OUR NORMAL PROC WHEN RECEIVING AN ALT ASSIGNMENT WAS TO HAVE THE PNF ENTER THE ALT IMMEDIATELY AND THEN CALL IT OUT VERBALLY AND POINT AT IT UNTIL THE PF POINTED AS WELL AND CONFIRMED AND VERBALIZED THE ALT SET WAS CORRECT. THE PROC WAS DISCUSSED BY THE CAPT OFTEN AS USED BY HIS FORMER AIRLINE; AND HAD BEEN USED BY THE TWO OF US FLYING TOGETHER FOR AT LEAST 6 MONTHS. IN THIS INSTANCE I HAD NOT SEEN THE CAPT SET THE ALT ALERTER AND HE HAD NOT VERBALIZED THE SETTING AND POINTED TO IT.