Follow-up Comment #2, bug #14758 (project grub):
Having the exact same problem with Debian unstable's latest (as of today)
grub (GNU GRUB 0.97).
I am not trying to boot from CD, but from disk, my setup is very regular.
Manually entering the EXACT SAME command simply works.
Please try to resolve this ASAP, it's quite critical.
# egrep -v '^#' /boot/grub/menu.lst
default 0
timeout 5
color cyan/blue white/blue
title Debian GNU/Linux, kernel 2.6.16.12
root (hd0,0)
kernel /boot/vmlinuz-2.6.16.12 root=/dev/sda1 ro
savedefault
boot
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