make all new partition table, including linux (type=83), swap (type=82), a vfat (type=c) partition. When lilo tries to install the bootloader in the MBR (/dev/hda, NOT /dev/hda1), it fails, probably because the DOS partition has not yet been formatted. Clearing the partition from the list of partitions to mount/boot with lilo permits the install to continue, otherwise you're stuck.
We are aware of this issue and are going to provide better wording in future releases in order to prevent this type of thing.
*** This bug has been marked as a duplicate of 4 ***