Nope. My root device is labelled /. And I have already posted by grub.conf file above. Thus, no can do. I'm still stuck. Is there anything else you can do to help me?

As far as I can tell, the only other people that have the same error:
Mount: error 2 mounting ext3
have all somehow made a mistake configuring, building or installing the kernel.

I sdiff'ed you config versus my 2.6.4 .config and noticed you've configured out much more than me. My config was based on the Redhat 2.4 one - run through some conversion step listed on one of the howto-upgrade sites (forget which one). One thing I can't see in you config is "Generic/default IDE chipset support" - CONFIG_IDE_GENERIC=y, but maybe thats a 2.6.[234] addition. Please check this option in your 2.6.1 kernel .config.