The 40D was one of the first models to have an AF-On button.
Later models you set up BBF simply by disabling it from the shutter release button (done from the button assignment screen).
However, on the 40D you do it as described in the manual on pg. 160, by changing Custom Function IV-1, Shutter Button/AF-On Button to option 3. This is similar to the "old school" way it was done on earlier models that didn't have the AF-On button.
If you have a BG-E2 or BG-E2N vertical battery grip on the camera, you might want to also Custom Function IV-2, AF-On Button/AE-Lock Button (*) Switch. This swaps the function of those two buttons. The reason it's needed with the BG-E2/E2N is because that grip doesn't have an AF-On button... It only has an AE-Lock (*) button, which you'll need to use to do BBF in the vertical orientation. The reason the BG-E2/E2N doesn't have an AE-Lock button is because it was actually designed for the 20D and 30D, but continued to be used on the 40D and 50D.
But I continue to use the * button for BBF anyway, even on newer cameras and grips that have both it and the AF-On. The reason I do that is because on most of them the * button is larger, more prominent and closer to my thumb... I focus every shot, but only occasionally use AE-Lock. So it just makes more sense to me to use this arrangement... but it's also partly out of habit because I've been using BBF with the * button since my film days with EOS-3 and Elan 7, as well as on every Canon DSLR I've used.
No one has asked, but FYI, both metering and image stabilization start when you press EITHER the shutter release or the back button (whichever you choose to use for BBF). The only thing BBF setup does is remove the focusing function from the shutter release, which in turn allows you to use AI Servo as your default focusing mode. Still can use One Shot, too, if you wish. But with BBF you can do things in AI Servo you can't without BBF... such as focus and recompose. By having BBF and AI Servo as your default mode, you can be ready to shoot both moving and stationary subjects, without having to stop and change the settings of the camera.