try downloading kanotix or knoppix cd and running partimage which is a kinda cutdown version of ghost in that in clones linux partitions and not the entire drive.
the dd command can of course be used to clone all drives but partimage is the best as you can burn to cdr etc. check out
www.partimage.org
2) not sure about lilo question but partimage will prevent that question arising except that after you have put the image onto the bigger drive you just install grub into the larger drive mbr by either booting the other drive up and pressing C for commands and read my tut on what to do or use a kanotix knoppix cd