Well, I've never seen LILO reboot options in the Logout dialog before. I guess that might be kinda nice, maybe, but I couldn't really help you as I've never seen that functionality before.
If you're referring to the difference in the dialog where it says "Logout", "Turn off computer", or "Restart Computer", versus just the dialog asking whether you're sure you'd like to logout, then that's probably related to kdm/mdkkdm. I think if you have mdkkdm, versus the normal kdm, it might not show you the other two options (same as if you're using gdm, xdm, etc.).
Otherwise, sorry, but I can't recall ever seeing LILO reboot options in the logout dialog (been using KDE 2.2-3.2)