Thank God, its the kernel problem, and not a compiling mistake. Looking
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I'm not sure if this is a kernel problem. I'm using a custom compiled 2.6.16 kernel on my old box. Its a Celeron 500MHz mendocino, 192 MB RAM and a 10 GB IDE disk. Boots alright without any issues.
Double check your configuration. You must have missed out on something.
Regards, Siddhesh