The "Missing Operating System" error basically means that the default Master Boot Record software is still there. The LILO boot sector software has not been written to the Master Boot Record.
To fix that, make sure that you are installing the LILO boot sector to the Master Boot Record. You should have this line at the beginning of the "/etc/lilo.conf" to install to the Master Boot Record.
If you want to install the LILO boot sector to the Slackware partition instead, then use this line.
To install the LILO boot sector to the Slackware partition you also have to set the "Boot" flag for the "/dev/sda2" partition so that the default MBR code knows which partition to boot from. You can use the "cfdisk" or "fdisk" program from Linux to set the "Boot" flag. That is not necessary when installing to the MBR, since the LILO boot sector will replace the default MBR code and ignore the "Boot" flags entirely.
Since your "boot" directory is in a different partition, make sure that you have mounted both "/" and "/boot" before you use the "lilo" command to install LILO. The "lilo" command will figure out the sectors containing the "vmlinuz" and "initrd.gz" files and write that information into the LILO boot sector. In order to do that, the filesystems have to be mounted at the locations indicated in the "lilo.conf" configuration.
It's very important that you run the "lilo" command again if you modify either "vmlinluz" or "initrd.gz", or the location of those files on the hard disk. You also need to run the "lilo" command again if you modify "lilo.conf". The LILO configuration is stored in the boot sector for LILO. The LILO boot loader does not look at "lilo.conf" when it is booting. Only the "lilo" command used to install LILO looks at "lilo.conf".
The difference between installing LILO to the MBR versus the Linux boot sector is this. Normally, the default MBR software can boot from one of four possible primary partitions. Each partition can have a different boot loader. Keeping the default MBR code (installing to the Linux boot sector) allows you to change the default boot loader (that starts first) by setting the appropriate "Boot" flag for one of the four partitions. A disadvantage to doing that is the extra step required to set the "Boot" flag of some partition. You only have to do that once until you decide to change the default boot partition. If you don't set the "Boot" flag of some partition you are likely to see the "Missing Operating System" error.
If you install LILO to the MBR, then LILO will always be the first boot loader to start. You can add other boot loaders to the LILO menu whether LILO starts first or not. For some reason most Linux distros install their boot loader directly to the MBR. If you have installed the LILO boot sector to the MBR you should not see the "Missing Operating system" error, since that is not a message displayed by the LILO boot sector.