For the first one, see the note in section 8.3.1 of the book
For the second one, maybe you need to compile ext3 filesystem support as built in (not a module). I would do ext4, too. Find those in the "File systems" section of the configuration editor (menuconfig).
After those things are set, then exit, save, and compile the kernel again.
P.S.: Be prepared for more of this kind of thing. Probably video stuff or storage drivers will be next. But I would tackle one thing at a time. And even after it finally boots, there still will be many more things in the kernel config to go back and tweak a different way.
P.P.S.: You are now in the part of the LFS journey that took me the longest time to learn (configuring the kernel). I spent days studying and experimenting. I probably recompiled my first LFS kernel thirty times (seriously). I'm still learning about this subject.