I would suggest leaving the old kernel and the lines for it in lilo just to have something to fall back onto in case you bork your running kernel.
Add lines for the new kernel after checking under /boot the name of wmlinuz. This is what I have at the moment:
Code:
image=/boot/vmlinuz-2.6.9-060105
label="Linux-2.6.9"
append="ramdisk_size=100000 lang=us hda=scsi hdb=scsi hdb=2434,255,63 nomce "
read-only
image=/boot/vmlinuz-2.6.7
label="Linux-2.6.7"
append="ramdisk_size=100000 lang=us hda=scsi hdb=scsi hdb=2434,255,63 nomce "
read-only