1) Invalid mode:
Go into your bootloader config file and add vga=9. This should make the error about the mode go away every time you boot. Grub syntax should look something like this (I'm not sure how this looks exactly in Lilo):
kernel /vmlinuz-2.4.18-3smp ro root=/dev/hdc2 hdd=ide-scsi vga=9
If you use GRUB, the config file might be one of these depending on the distro:
If you use lilo, the config file should be /etc/lilo.conf.
4) Bootable partition:
You shouldn't have to make any partition bootable in fdisk (or any other graphical partitioning software for that matter). The boot loader (grub or lilo) will probably be installed in the MBR (Master Boot Record) instead of in one of the individual partitions. In most installations I've seen, what ever partition is going to be mounted at /boot (usually partition 0) is made bootable. I don't think this is needed in many cases though.