I'm gonna assume that you're booting with a graphical lilo, as is common for Mandrake. Try booting with the "linux-failsafe" option, which should fire you in there with fewer options (and no framebuffer). If you get to the "black screen", try going to another console by hitting ctrl+alt+F2. If you get there, you can log in as root. Then you can fire up your favorite editor to fix the problems.
It sounds like you have two problems. One is the graphical problem, which is actually quite easy to fix - which is a good thing. The other sounds like you may have messed up your lilo.conf file a bit too.
Here are where these files are:
I think nano is installed by default (and its easy to use), so to edit your XFree config, you'd
nano -w /etc/X11/XF86Config-4
Here's a well-commented example
XFree config file that I ripped off the Gentoo installation (thank you Gentoo) that you can use as a guide.
Find the section near the bottom referring to the screen
Check out the entries below that heading. Look for the particular subsection that refers to your default color depth. For example, if your depth is 24 by default, you'd change the resolution there. If the "modes" are set to the wrong value, you simply change to the right one and save the file.
Modes "1184x864" "1024x768" "800x600"
you'd change to:
Modes "1024x768" "800x600"
and start your x-server. In this case, you'd have to try killing the one you had running on tty0, so you'd hit alt+f7 to get back to where your login screen is supposed to be and hit ctrl+alt+backspace. That should kill it and restart it properly. If not, several attempts until it really dies and then arestart would work (you'd log in as root and type "telinit 5" and you'd be graphical again).
Now, if the kernel panic is happening and you can't get past it no matter what, try to type, when it asks you for an init, "/bin/bash" and see if it lets you get a shell. If so, you can edit from there. In that case, you'd want to try a rescue. Insert your Mandrake CD and hit F1 or F2 (whichever it says) to get help/rescue. Type rescue and it'll fire up a recovery tool list. Choose to repair lilo and see if that fixes it.