If you want to boot a recent version of the Linux kernel with an (external) firewire disk as root device, the kernel may want to mount the root filesystem before the driver recognizes the hardware, which results in a kernel panic. To circumvent this ensure that your kernel has support for initial ram disk (initrd) and try my (this) linuxrc, which does nothing more than waiting for the root device to appear. But be sure that you have read, understand and modificated the Makefile properly, especially the install section, as it may destroy your boot configuration and comes with no warranty, of course. Don't forget to insert an initrd line into your lilo.conf.