This is what "L 01 01 01..."means:
0x01 "Illegal command". This shouldn't happen, but if it does, it may
indicate an attempt to access a disk which is not supported by the
BIOS. See also "Warning: BIOS drive 0x may not be accessible"
in section "Warnings".
I would have installed Lilo to the MBR as the newest version sets things up pretty well that way.