This is probably because you didnt enabled frame-buffer in new kernel compilation and use a vga=xxx option in lilo.conf.
If you want to this work without editing lilo.conf you gotta recompile your kernel and enable framebuffer there.
Just make menuconfig go to Console Drivers click Frame Buffer. Then Choose "Vesa Drivers" then click "Low-Level Drivers" then choose ones for 1bit-2bits-8bits etc.Then re-compile whole kernel you dont need to compile modules. Then make a lilo -v and reboot.Everything should work now