It sounds like the NT boot loader might be pointing to the wrong drive. You should be able to edit the boot.ini file the NT machine to correct that, but it might be more trouble than its worth.
Linux can most definitely reside on /dev/hdb with NO special modifications. The easiest way to fix this is probably to move the NT drive back to /dev/hda, but it still won't boot because you have overwritten the MBR with LILO most likely. So, after making that drive the Primary Master (/dev/hda), boot to a Win98 boot floppy and run FDISK /MBR to repair the boot record. After that is done and you get NT booting fine, you should be able to install Linux to /dev/hdb with NO problems.