kernel and initrd will be cp'ed to /
kernel-VERSION-SOURCES
initrd-VERSION-SOURCES

To use with lilo add the following to lilo.conf

image = /boot/kernel-KERNEL-SOURCES
root = /dev/XXX
label = "MY_KERNEL_NAME"
initrd = /boot/initrd-KERNEL-SOURCES
append = "root=/dev/ram0 init=/linuxrc"