See this thread
for a short decription of the "LI" error.
Some quick thoughts:
How is your drive partitioned? Is there any other OS on the system?
Compaq drives have a special hidden diagnostic partition on them; perhaps that's conflicting with lilo's install to the MBR.
Boot the system with a floppy, configure /etc/lilo.conf properly, and run /sbin/lilo to install it manually.