I'm still not getting the difference. He chose the second box because he deduced the the key must be there based on the assumption that one of the inscriptions was true. There is no equivalence between assuming a key in the second box and deducing a key in the second box based on a false premise.
However, assuming one of the inscriptions is true and assuming a correlation between the inscriptions and the contents of the box seem the same to me. He can't deduce a correlation between them, because the only basis for such a correlation is the existence of the inscriptions and the basic format of the king's challenge (which was not identical to the jester's own riddle). There is nothing in the first inscription to suggest a correlation exists, particularly if he determined that the inscription must be false! It has to be a faulty assumption, and I don't see how it is different than assuming one of the inscriptions must be true, other than semantically.
I'm not trying to be obtuse here, I'm just not seeing the difference between what you've said and what I've said.
based on the assumption that one of the inscriptions was true.
He did not assume either of the inscriptions were true. He assumed that each was either true or false.
He never assumed a correlation. He deduced a correlation. He was wrong because the deduction hinged on a false assumption.
Edit: Looking back on this, I guess he did assume a correlation. He implicitly assumed that the position of the dagger did not cause the liar paradox. This is still a lot less of an assumption than assuming that either inscription was true.
Once upon a time, there was a court jester who dabbled in logic.
The jester presented the king with two boxes. Upon the first box was inscribed:
On the second box was inscribed:
And the jester said to the king: "One box contains an angry frog, the other box gold; and one, and only one, of the inscriptions is true."
The king opened the wrong box, and was savaged by an angry frog.
"You see," the jester said, "let us hypothesize that the first inscription is the true one. Then suppose the first box contains gold. Then the other box would have an angry frog, while the box with a true inscription would contain gold, which would make the second statement true as well. Now hypothesize that the first inscription is false, and that the first box contains gold. Then the second inscription would be—"
The king ordered the jester thrown in the dungeons.
A day later, the jester was brought before the king in chains, and shown two boxes.
"One box contains a key," said the king, "to unlock your chains; and if you find the key you are free. But the other box contains a dagger for your heart, if you fail."
And the first box was inscribed:
And the second box was inscribed:
The jester reasoned thusly: "Suppose the first inscription is true. Then the second inscription must also be true. Now suppose the first inscription is false. Then again the second inscription must be true. So the second box must contain the key, if the first inscription is true, and also if the first inscription is false. Therefore, the second box must logically contain the key."
The jester opened the second box, and found a dagger.
"How?!" cried the jester in horror, as he was dragged away. "It's logically impossible!"
"It is entirely possible," replied the king. "I merely wrote those inscriptions on two boxes, and then I put the dagger in the second one."
(Adapted from Raymond Smullyan.)