I have good news and bad news. First, the bad news:
There are significant differences between the 2.4 and 2.6 series kernels. You can't simply compile & install as if this where newer 2.4 release. There are changes (most notably the handling of device files) that require more action on your part. If you have done all this, my apologies, but your post doesn't seem to indicate that.
The good news:
I found a document online that describes the process of migrating from a 2.4 kernel to a 2.6 one. You can find it here
. It is a multi-page document. So be sure to read through everything. Like I said, it's not a trivial upgrade...