I just came to notices something and now it is bothering me...

I receintly installed RH7 on a new machine, and followed the same setup as per my previous installations. Setting the drive up as follows: boot partition 16Mb, Swap 1Gb and the remainer "native Linux /"

I then noticed that during setup, if I recall correctly I was asked where to place lilo, and if my memory serves me correct, it did not install lilo to the boot partition.

Is this correct? Or should it be installed on the boot partition?
Is the /boot directory, actually on the boot partition of the drive, I assume this contains the boot image/files?

Lilo is generally not installed in /boot... However, the boot configuration files (and the kernel image itself) resides there.

Lilo is usually in /sbin