How did you install the new kernel. The stanza
in your lilo.conf file could be referring to the new kernel if you installed the kernel with a package system or a script. The 'vmlinuz' file may be a link to the new kernel, with the old kernel entry being changed to vmlinuz.old.
The image= line contains the name of the kernel to boot. The initrd= line refers to the ram-disk file which corresponds to the same kernel.
However if this isn't the case, this should work.
initrd=/<name of new initrd>.img