Hi !

The reason for error "Fatal: Default image doesn't exist" is that the statement default= must specify a valid label defined in a image-section. In your lilo.conf there is no
image= ...
label=linux
so
default=Linux
will cause this error.

Change it to
default=Knoppix
or which system you want to us as the default booting system if timeout occurs and no system is manually selected.

(had the same error and it took me a whil for finding the reason)

The "skipping"-message occured, because that image coudn't be found too. so this system will not appear in the lilo-booting-menu.

cheers

Knut