Worry not! It sounds to me like you haven't installed Lilo properly. The problem with the floppy disk is (I hope) not a major one at this moment. If you can boot from the CD then you should be able to go into 'rescue' mode and sort out why you're not given a menu when you start up the machine. Firstly, if you have the bandwidth and inclination, I would go for a newer version of RH since that one is now getting a little old. Apparently RH7.3 is good, but RH8.0 is now out...
If you can boot from the CD, then right at the beginning, try pressing <F1> and typing rescue. If this works, then you should be given a menu of what to do. You want to be able you mount your partitions and have access to them, and edit the file /etc/lilo.conf so that the first line reads: boot=/dev/hda (the liklihood is that this currently has a number after it, get rid of the number). Save the file and run lilo.
If you're not happy with going through all that hassle, you could simply re-install RH7.0 (or whatever version you choose to go with) and when it comes to installing LiLO put it in the MBR.
We can (hopefully) sort out your floppy disk problems later...