Followed m_yates clear and simple "Guide to 2.6 kernel upgrade/recompile"
. Very good, thank you m_yates
Everything went well - new kernel is booting fine with the Debian logo and small fonts.
But, during boot the screen is a bit fuzzy or shaky. The fonts are readable but there is a very small movement which looks like wrong refresh rate (?).
Could it have anything to do with the parameters in grub/menu.lst:
The full line is:
kernel /boot/vmlinuz-2.6.8-custom.1 root=/dev/hda3 ro video=vesafb:ywrap,mtrr vga=788
This only happens during boot up. After that everything works well