I had the same problem with Debian on the Optiplex 320, Grub just does not work on this hardware.
The key in lilo seems to be the option pci=nomsi
which if I recall had to be used at the boot: prompt to get the Debian installer to run on this machine.
This is the lilo.conf from from my Debian Etch box on an Optiplex 320
I know your issue is already solved, but I figured I'd put this here as an additional reference for future searches.