More to think about:

Cleaned up lilo.conf a bit:

Code:
boot=/dev/hdb
vga=normal
prompt
timeout=500
append = "apm=power-off nomce"
image=/boot/vmlinuz-2.6.0-1-686
	label=knoppix
	root=/dev/hdb3
	read-only
	initrd=initrd.img
## A Windows installaton, example for partition 1 on first IDE harddisk
	other=/dev/hdb1
	label=windows
#	optional
	table=/dev/hdb
a more verbose lilo output:

Code:
root@Knoppix:/boot# lilo -v -t
LILO version 22.5.8 (test mode), Copyright (C) 1992-1998 Werner Almesberger
Development beyond version 21 Copyright (C) 1999-2003 John Coffman
Released 10-Oct-2003, and compiled at 22:17:37 on Nov  3 2003
Compiled for Debian GNU/Linux.

Warning: LBA32 addressing assumed
Reading boot sector from /dev/hdb
Warning: '/proc/partitions' does not exist, disk scan bypassed
Warning: /dev/hdb is not on the first disk
Using MENU secondary loader
Calling map_insert_data

Boot image: /boot/vmlinuz-2.6.0-1-686
Mapping RAM disk initrd.img
Fatal: open initrd.img: No such file or directory
The contents of my /boot directory:

Code:
-rw-r--r--    1 root     root       759313 Jan 11 07:17 System.map-2.6.0-1-686
-rw-r--r--    1 root     root          512 Dec  7 14:35 boot.0340
-rw-r--r--    1 root     root        49779 Jan 11 06:57 config-2.6.0-1-686
lrwxrwxrwx    1 root     root           38 Jan 11 13:26 debianlilo.bmp -> /usr/share/lilo/contrib/debianlilo.bmp
-rw-r--r--    1 root     root            0 Jan 31 11:16 initr
-rw-r--r--    1 root     root       172513 Dec  7 14:25 initrd.gz
-rw-r--r--    1 root     root            0 Jan 31 15:06 initrd.img-2.6.0-1-686
-rw-r--r--    1 root     root            0 Dec  7 14:25 knoppix-old-mbr.1070803528
-rw-------    1 root     root        70144 Jan 31 10:19 map
lrwxrwxrwx    1 root     root           33 Jan 11 13:26 sarge.bmp -> /usr/share/lilo/contrib/sarge.bmp
lrwxrwxrwx    1 root     root           31 Jan 11 13:26 sid.bmp -> /usr/share/lilo/contrib/sid.bmp
-rw-r--r--    1 root     root            0 Jan 31 11:17 vmli
lrwxrwxrwx    1 root     root           18 Jan 11 13:26 vmlinuz -> vmlinuz-2.4.22-xfs
-rw-r--r--    1 root     root            0 Jan 31 11:16 vmlinuz-
-rw-r--r--    1 root     root            0 Jan 31 11:22 vmlinuz-2.4.2
-rw-r--r--    1 root     root      1117933 Jan 11 07:17 vmlinuz-2.6.0-1-686
Notice that initrd.img.2.6.0-1-686 has 0 bytes.