I feel very silly to bother you with this problem but somehow I managed to delete my /initrd (I assume) since it gives me a
kernel panic: Try passing init= option to kernel. Can somebody please tell me how to solve this?. I REALLY don't want to lose my OS, because I have some valuable data on it.

Are you missing your initrd or or your init? The initrd is a small filesystem containing drivers and such to be loaded into your kernel on boot. The init program is the first user space (non kernel) program run when your system starts. It is responsible for starting services, calling the program that provides the login prompts, etc.

In any case, did you change anything in your machine? Add a new disk? Try to install a new kernel? If so, tell us all about it, as it is likely your problem is related to that. Otherwise, your best bet is to boot off rescue media and reinstall the appropriate package -- your kernel, if it is the initrd that's missing, and the SysVinit packages if it's init itself that's missing.

edited to add:

Also, why don't you post a few lines of output above that error message. it will help us see more of what's going on.

there are no hardware changes in my system, and no recompiled kernel. From what I could figure out myself the /initrd dir is needed by the system in order to boot corectly. I was forced to login as root and I might have deleted it by mistake.
Anyway I might be wrong so here it is the output from my system (MDK10.0 default):


Mounting root filesystem
mount: error 6 mounting ext3 flags default
well, retrying without the option flag
mount: error 6 mounting ext3
well, retrying read-only without any flag
mount: error 6 mounting ext3
pivotroot: pivot_root (/sysroot, /sysroot/initrd) failed: 2
Remount devfs at correct location if necessary
mounted devfs on /dev
Freeing unused kernel memory: 272k freed
Kernel panic: No init found. Try passing init= option to kernel.



And this is the output of my system booting into failsafe option in Lilo:

....................
VFS: cannot open root device "306" or unknown-block (3,6)
Please append a correct "root=" boot option
Kernel panic: VFS: unable to mount root fs on unknown-block(3,6)


I surely didn't modify any boot scripts! I had no reason to do so! my root partition is /dev/hda6.
How do I pass those options in Lilo? After I press Esc it gives me the Lilo with no GUI, I type my boot option and.... simply write the kernel option? I never had to do this before.

No offense dude but I think you're in trouble. I had the same problem a while back with Slackware 9.1. I posted here n everything but I couldn't find a solution for it. In the end I had to reformat and reinstall Linux.

yeap, I know.

I reinstalled my system a couple of times before because of this error but now...
Besides I need that data (which I could retrieve using Total Commander with a plugin for ext2 - works for ext3 too) but it must exist a way to solve this, and wouldn't hurt to know how to deal with it next time I encounter it!

I finally had time to take a look and from what I saw I didn't delete /initrd after all. Any other ideas? Posible problem? or even a solution.