I stopped using lilo with Windows Me, because of the old 1024 cylinder problem, also the MBR (master boot record) of Windows desktop systems after Windows Me will not share the MBR.
If you do manage to install lilo on the MBR, you can be almost sure windows won't boot.
Try GRUB (Grand Unified Bootloader) from FSF. There are free versions around - just do a google search for grub. Basically, grub will boot any compressed image and has no problems with visible cylinders.
Also do a search on this forum for 'grub and Windows XP', or just 'grub and dual boot'. You'll find pages of stuff on this clever little program.
Post if it works!