Checked my /etc/lilo.conf. The 3 image entries are vmlinuz, vmlinuz-2.4.26 and vmlinuz-2.6.6. A check of /boot reveals the vmlinuz is a link to the 2.4 image.

What affect on the installed apps is there in choosing one kernel over another?

I haven't changed the delay. I do see a delay=20 line which the description says is the number of tenths of a second it waits (2 seconds in this case).