Hi Bryan,
It is much better to put the coil (iron pipe, not copper) in the firebox, not around the flue. The heat transfer by radiation rather than convection on a relatively small area will be much better, and it will not have the detrimental effects of cooling a portion of the flue as others have mentioned.
If you're making a new firebox, and have the welding skills, even better would be to enclose the firebox in a water jacket; particularly if it's just for heating water, enclose all surfaces except the door to get as much transfer to the water as possible, and little transfer out to the room. There's an excellent article in Home Power many years ago (Issue 36, page 18) that explains exactly how to do what you want. The pdf will cost $5 from their web site, but I think it's exactly what you're looking for.
Dave