Lilo fails to install on a machine with an unformatted FAT16/32 partition. One very nice feature with fdisk is that you can make fat partitions on the fly- however setup should ask you to format these partitions before installing lilo... if you choose to install lilo and have it boot to any of these partitions (with the honest intentions of installing an os on them later).. lilo will fail. For the new user this might be confusing..
Assigned to dledford
This should be handled better in current releases