I'm going to attempt to give you the full background story associated with my problem:
I recently upgraded a dual boot machine (RH 7 / W2K) to a (FC 1 / W2K) machine. In order to accomplish the upgrade I used Partition Magic to resize my Linux partitions because the FC1 upgrade required more space than what I had on my linux partition. PM resized my partitions successfully.
Next, I proceded to upgrade the RH7 partition of FC1. During the upgrade process, I selected the option "update current boot loader configuration". The upgrade process completed successfully.
Now, here's the problem:
When I reboot the machine after upgrade, lilo comes up, but when I select Redhat, it boots up the old kernel (2.4.5).
Here's a look at my lilo.conf: