You do not have to configure both grub and lilo, either one or the other. They do the same job, in different ways. Grub is the RedHat default and most people think the simpler to configure.
When you compile the kernel, you need to include initrd support, and then create the initrd file (its a boot ramdisk). Make sure you also include in the kernel, built IN and not a module, the correct filesystem support for your root filesystem.
I think perhaps you've just skipped the mkinitrd step. If you did create the image, then you're right that it is just a config issue, again you need to post the config.
"..the triumph of evil is for good men to do nothing."
VIDIA video driver RPMs for Fedora
:: see yum repo at livna.org