kernel update, initrd image help

[Ian L <debhelp@merk.caltech.edu>]

I'm trying to install kernel 2.6.8 and during the apt process it says i 
need to configure lilo to use initrd.

Can someone either explain the process for doing this or point me to a link 
that does? I found a default mkinitrd.conf file, ran mkinitrd and it 
created an image file (it complaining about there being no module 
directory). But i'm not sure what settings in the config file i should set.

The main reason i want to upgrade the kernel is to try and get my network 
cards working (nforce2 and intel pro 100 s).

Thanks,

Ian