I've been thinking a bit. You really don't need to touch the MBR to install linux.
1)You can have LILO be deposited on the boot partition (or was it the root partition?) when the installer asks you where to put LILO. That way, the installation of Linux should proceed smoothly since there won't be any attempt to overwrite the MBR.
2) Also create a floppy boot disk during the installation.
3) Boot into linux using the floppy and follow the step 4 in the link below:
http://www.enterprisedt.com/publications/dual_boot.html Instead of using the floppy, you should be able to mount hda1 and deposit the bootsect.lnx file directly into C:\
as follows:
% mount -t msdos /dev/hda1 /mnt/dos
% cd /mnt/dos
% dd if=/dev/hda3 of=/bootsect.lnx
bs=512 count=1
NOTE: Replace hda3 with the partition where you have LILO.
% vi boot.ini
Edit BOOT.INI and add the following line at the end:
C:\BOOTSECT.LNX="Linux"
then reboot