Thanks for posting your issue on this, I've been pulling my hair out on a similar project myself, and maybe this will save someone else a headache.
My project was installing LinuxMint in (another) partition on the same hard drive that I have Slackware14 installed on - with Lilo in the MBR of that hard drive to boot Slackware, and grub in the root partition of the linuxmint install.
This post has the solution that worked for me (though I not the one where I finally found my answer)
Adding just two lines to lilo.conf to chain load grub2 from lilo worked fine, for me those were -
# Linux bootable partition config begins
# Linux bootable partition config ends
I found a tutorial suggesting adding a third line for root= using a grub disk format as in root = (hdX,X) and it kept me confused for a while.
In the end it didn't need to be there, and just the other= and label= lines did the trick.
I found that running lilo -t (for test) was very helpful in try to sort this out, as well as -C for a custom lilo.conf that I edited frequently to test for errors.
The specifics on my system are all linux distro's on a second hard drive with Slack on sdb5, with it's own primary boot partition on sdb1, and Linuxmint on sdb6. (The almost never used WindowsXP OEM disk is still /dev/sda, and it's chain-loaded from lilo on the second hard drive. BIOS is set to boot the second drive first).
My succesful lilo command ended up being <lilo -v -C /etc/lilosetup.conf -b /dev/sdb> (run as root from the /boot directory)
To test the lilo install first the command added -t <lilo -t -v -C /etc/lilosetup.conf -b /dev/sdb>
If you are using the standard lilo.conf just change the name to reflect that, but you can still specify its path with -C.
I find that editing lilo.conf and using the liloconfig script didn't suit my needs as it installs lilo on the MBR of the first hard drive by default and would overwrite the windows bootloader, so be carefull with that!
The lilo options are -v for verbose so I can see out put as it works, -C for the custom lilo.conf file, and -b for my boot device which is required if it's going anywhere other the the MBR of the first hard drive (mine was).
It's a little tedious, but that should help for trying to get a lilo boot OS and a grub2 OS to coexist and play nicely together.
I hope it helps.
PS - I suppose those who know this stuff better than me won't be surprised, but I'm now unable to boot the windows drive from lilo, so at least that part of it is still a work in progress.
*Windows will boot still from BIOS by changing the disk boot priority.