How about posting your lilo.conf so we can see where it's at.
You'll find it at /mnt/hdb1/etc/lilo.conf

Did you manage to copy over the files ok when installing?
That is, does it at least write to hdb1?
Try mounting your hdb1 with:
$ mount /dev/hdb1 /mnt/hdb1
and then checking what you have mounted with:
$ mount
Hopefully you get a (rw) at the end of the line containing hdb1.
You can also try booting the CD with:
$knoppix nodma (+ other cheatcodes you usually use)

As for copying to floppy:
$ mount /mnt/floppy
$ cp /dev/hdb1/bootsect.lnx /floppy
$ umount /mnt/floppy

Just a thought, do you have some sort of virus protection on in your BIOS
preventing writing to the master boot record. Might be worth a check.