So what does dmesg say now? The post in thread #17348 should work for the rest of the setup.

The error from running lilo doesn't seem to affect it getting updated as it added the kernels. Do you have something like this in lilo.conf:
disk=/dev/hde
bios=0x81
If yes, comment out with a # to:
#disk=/dev/hde
#bios=0x81
If no, post lilo.conf