It's unlikely to be a conflict with himem.
The trouble is, it says 'VFS cannot mount root' but it doesn't indicate WHY. Is it the wrong device? Is the fs compiled in? Could be a number of things.
The first things to check are to make sure that you compile in support for your SATA chipset (and SCSI obviously) and also whatever filesystem you're using on your root fs (that's an easy(ish) one to forget, been there
).
As an aside, I'd recommend grub over lilo, although your problem is almost certainly not boot manager related. But still, grub is far more flexible than lilo.