First of all, I don't think there is need for 1GB swap, that can even slow things down. Keep your swap partition at 256 MB. If you have 256 MB RAM or more, that swap will hardly get used at all.
Where to put lilo? (I'd go with grub, but that's your choice.) You have EZ-bios on the first hd mbr. Can you tell it to boot from the second hd? Then install lilo in the second hd mbr.
I think you could also replace ez-bios with lilo, as lilo can handle large disks on its own. Or if you have Win2000 or XP you can copy the linux bootsector to windows and have the nt-bootloader take care of selecting linux (I've never done that, but there are enough threads and howtos around to help you on that). Another option is booting linux from windows using loadlin.
As you see, there are many ways to go... That's the beauty of Linux.