I'm not certain what would go wrong if you deleted the 1st partition in qtparted.
One thing I am certain of, is that the mbr has to reside in that partition in order to boot from the hd.
You could delete it and then recreate it, make it active and format it as fat32 (vfat) and have lilo install into that.
Theoretically, that would work without having to do a reinstall.
In that case you would change /etc/lilo.conf boot= line back to /dev/hda and root= should point to /dev/hda2. Also, you would need to modify /etc/fstab to include /dev/hda1 with a mount point of /mnt/hda1 so you can have extra space to mount /hda1 to host your /home directory. (This is not recommended if you're a newbie trying to learn linux and want stability, this is actually for the advanced user who knows the risk involved in doing this and the possibility of losing the ability to boot along with their personal data on that partition.)
That said, if you're really into having a stable system, a total disk wipe followed by a proper partitioning/formatting scheme topped off with a full install of knoppix would be the best thing for you, IMHO. After all, it takes roughly 20 minutes to get a full install from the cd once you have your knoppix configuration setup before you do the install. Then you can transfer your data back to the /home directory. This would give you a nice clean bootable system, but this is not advice I like to give out, unless it's absolutely necessary, because I hate seeing folks lose something important in a reinstall process.