Just as an afterthought, I bet it would work if you had windows and linux on the same drive, on different partitions. Maybe linux and a small xp partition containing only OS stuff

I was never able to get either the Lilo screen nor the Grub screen when I put the boot loader in /dev/hda such as grub-install /dev/hda. When I put it in the first linux partion and used the boot image then the windows boot loader kicks in and give me a menu. Windows works but Linux hangs.

It has really puzzled me.

Maybe some one can explain to me how this thing works. When I use the boot image with the windows boot loader, i.e. c:\bootsec.lnx="Linux", does it ever invoke grub.conf or lilo.conf? If not they are useless in this case, right?

The answer is yes and no. In such case, lilo.conf or grub.conf is not used directly. The thing is that the correct bootsector (made using lilo or grub) must be in the bootsec.lnx file.

Here is something interesting http://slashdot.org/article.pl?sid=0...id=110&tid=187

For GRUB yes grub.conf/menu.lst will be read by GRUB, for LILO no, lilo.conf is only used when installing LILO.
Booting the extracted bootsector in Windows bootloader is more or less the same as doing "chainloader" in GRUB, except that the bootsector is read off a file instead of a partition.