Make sure to chmod /etc/lilo.conf to "600" (readable and writing for root only) in order to prevent others to read your passwords.

Now, you have password protected LILO but it won't prevent someone from booting from a floppy and mounting your root partition. You can prevent this by disabling boot from floppy in your computer's BIOS. After you are done make sure to password protect the BIOS to prevent others from changing the settings.