Have a look at this page:
It is a bit outdated but describes building a minimal 2.4 Linux system using a floppy disk for the kernel. This could easily be adapted to suit your needs, and probably won't be as long winded as using Linux From Scratch, which goes into great detail and requires quite a bit of space (nothing wrong with LFS by the way).
Linux From Scratch is well worth reading though. It would be a great learning experience for anyone wanting to develop their own Linux Operating System.