Be aware that lilo is a quite minimalistic boot-loader. It stores a static block list where to load the kernel images. So everytime you change the config or the kernel images you have to re-run the lilo program. Modern boot-loaders like GRUB might be a better choice. They can ready the filesystem natively and often include a shell-like interface to manipluate the whole configuration on-the-fly.
For a better understanding of LILO please the LDP LILO Howto \cite{LILOHowto}.
In T2 Linux the lilo package installs a STONE module which can configure and install lilo automatically.
The layout of configuration file /etc/lilo.conf is quite simple. The file might contain multiple image section specifying the kernel image to load, with optional arguments thereafter. With 'root=' the system's root device needs to be specified, 'label=' specifies the name used by lilo to refer to this configuration and 'read-only' specifies that the root device should be mounted read only by default. So a basic configuration looks like:
image = /boot/vmlinuz root = /dev/ide/host0/bus0/target0/lun0/part2 label = t2 read-only
After the configuration was changed the lilo executeable must be run to update the static block-lists ...