hd0,3 is just an example.
Assuming you only used one partition (if you only mount $LFS, this is the case. If you also mount for example $LFS/boot, it is not the case) you need to substitute the 3 with the appropriate number.
If you used:
- sda1 -> hd0,0
- sda2 -> hd0,1
The first 0 tells grub it is on the first disk. The second number tells which partition (Mind you: it starts counting from 0, not 1!!).
With the info given you probably need to use: root (hd0,0) You also need this in the menu.lst (further on in that chapter).
Hope this helps.