I was just going to post because of the same problem. I compiled a custom kernel and added it to lilo.conf, ran lilo and then when the lilo boot screen appeared, the keyboard did not work: neither of the keys was responsive and I could not select my new kernel.
If I reboot with the Slackware cd, I am not able to write anything at the prompt:
So I am not able to try my new kernel. This problem seems to be persistent: after at least 6 consecutive reboots I am still unable to select the other lilo entry.