I see you are using vmlinuz.

My guess is that is the vmlinuz file. It's pointing to the 2.4 kernel. The default vmlinuz does that.

You need to make an new Vmlinuz file that points to the 2.6 kernel.

If you look carefully at the distro, you see that vmlinuz is actually a link that points to 2.4.

That's what you need to change.

sakiZ