Yes, that’s correct. If it’s not set, and then you run cmake ../.. -DUSE_BOOTLOADER=1 (or similar, depending on your setup) you can then look at the CMakeCache.txt file again and should see the entry now. You can also modify entries in that file.
After adding USE_BOOTLOADER=1 you’ll probably have to flash the bootloader again, since it may have been overwritten. Make a different cmake build directory for it, per the instructions in ENV_SETUP.md in the repo.
Try running make dfu_flash for both the bootloader app and for your custom app. 
Hope it works normally at that point! If not, let us know.