Your kernel must have:
stable loopfs support, which means it really needs to be 2.2.19 or 2.4.7 (or later)
CD-ROM device support
ISO9660 file system support
initrd ramdisk support (built-in)
Virtual memory file system support (built-in)
floppy disk support (built in)
ext2 file system support (built-in)
Support for the backup media (Tape, CD-RW, NFS, Hard disk)
If the backup media is CD-RW then you need SCSI emulation also
Please note that the stock kernels of Red Hat 7.2, 7.3, 8.0, Mandrake 8.2, 9.0, SuSE 7.x,, 8.x, and Slackware 8.x all meet Mondo's requirements. If your kernel does not meet Mondo's requirements then there is something wrong with it. Mondo's demands are not unreasonable.