I think your problem is in your `grub.con' file. I can only assume that since you had to install from a floppy, something in your `grub.con' file got confused.
YOu have 3 partitions:
You need to change the "ro root=/dev/hda1" settings in `grub.conf' where it loads your kernel to "ro root=/dev/hda2". "hda2" is your second partition and grub needs to know what partition to mount your root filesystem. Apparently, and I don't know how, it is trying to mount your root partition on the same /boot partition.
* Grub can be kind of confusing in how they refer to the first partition as (hd0,0) and then you have to remember that the "/dev" syntax (from the kernel) refers to that same partition as "hda1", *not* "hda0" (and similiar for other partitions).
Make that change and it should work.