I installed Red Hat 6.1 (download) on a DOS machine with Windows 3.1 (Fat 16). I also made a mount point for DOS as /cdos. When I looked in /etc/fstab the file system was shown as vfat. Sure enough, when I rebooted the word LI appeared on screen and then the machine hung - as it tried unsuccessfully to find a vfat file system !! Your software should prompt for the corfect file system or find it and enter correct data in /etc/fsatb.
"vfat" is the correct partition type for all DOS partitions (FAT16, FAT32, everything except for NTFS) therefore this was the correct entry. Getting "LI" on boot means more than just a failed mount of a MSDOS filesystem. It means that the BIOS of the machine is not able to find the bootloader at all.