Also, when installing on an existing system, especially if the hard drive had ANY previous OS on it, make sure you keep an eye on the MBR. I tend to stick Windows and several Linux OS on various partions, or when I upgrade a Windows box to Linux, I stomp on the MBR with lilo. If I don't, telling lilo to use just the superblock, on the next boot, whatever stub is in the MBR tries to boot. In fact, I just had that wtf moment the other day after reinstalling 14.0 over the old 13.37. Pretty much same error as the OP.
Moral of this ramble, have your lilo.conf look something like this:
# Start LILO global section
boot = /dev/sda
compact # faster, but won't work on all systems.
# Linux bootable partition config begins
image = /boot/vmlinuz
initrd = /boot/initrd.gz
root = /dev/sdb1
label = Slackware
read-only # Partitions should be mounted read-only for checking
# Linux bootable partition config ends
# Windows bootable partition config begins
other = /dev/sda1
label = Windows7
table = /dev/sda
# Windows bootable partition config ends
Basically, "boot = /dev/sda" tells lilo to use the MBR, "root = /dev/sdb1" is were your bootable partition is.
Now, if this was a running installation, and you suddenly can't boot, then I suspect your hard drive: Track 0, partition table or susperblock errors with the possibility of a bad /boot or even /boot/initrd.gz I would grab a copy of http://gparted.sourceforge.net/livecd.php
and do some testing.