I have no idea how in your original menu.lst you got BOOT_IMAGE=PClinuxOS_2012.2 that can not work, did you edit this like that?
The initial installation process from the liveCD does that. The BOOT_IMAGE=<whatever the title is> that one chooses when editing the grub installation entries, before they are ever written to the installation's /boot/grub/menu.lst. Not only do they work fine as they are shown, removing them entirely has no effect on the actual boot process.
Example from this installation on my machine:
title Test64-sdc5
kernel (hd2,4)/boot/vmlinuz BOOT_IMAGE=Test64-sdc5 root=LABEL=test64 nokmsboot acpi=on resume=LABEL=swap2000 splash=verbose vga=791
initrd (hd2,4)/boot/initrd.img
title Test64-sdc5-nonfb
kernel (hd2,4)/boot/vmlinuz BOOT_IMAGE=Test64-sdc5-nonfb root=LABEL=test64 nokmsboot acpi=on resume=LABEL=swap2000 splash=verbose
initrd (hd2,4)/boot/initrd.img
This is consistent with every PCLinuxOS installation I currently have, and all that I can remember from the past. Here's one from a 2008 MiniMe installation.
title 750_MiniMe
kernel (hd1,7)/boot/vmlinuz BOOT_IMAGE=750_MiniMe root=LABEL=750mm acpi=on resume=LABEL=swap750 splash=verbose vga=791
initrd (hd1,7)/boot/initrd.img
It still boots right up, and runs fine, as it always has.
with all respect, I disagree 
Just installed 2012.02 and my boot entry is as I outlined it before. The fact that Grandpa has 3 things I have never seen in there: BOOT_IMAGE=PClinuxOS_2012.2, pci=nommconf, and nokmsboot makes me think he edited menu/lst himself. Another indication for this assumption is the fact that BOOT_IMAGE=PClinuxOS_2012.2 only appears once and is not present for the entry linux-nonfb in his original menu.lst. Let's see what he has to say about that ... 
-p.
Also with all due respect, you can disagree until the cows come home, but it won't change the fact that what I said above is true.
Each entry that will appear on the boot menu is editable during the installation process. Grandpa edited the first to get a title that would differentiate it from any other installation, rather than leave the default
linux title. I do the same for every installation. I also edit the second
nonfb title, replacing the default
linux with
<my title>-nonfb, for consistency with the first stanza, but it seems that Grandpa did not. As these items are purely optional, that's his choice.
The
BOOT_IMAGE= entry for that stanza will then be the
<title of that stanza>-nonfb If unedited, it will be the default
linux-nonfb.
Repeating, this all takes place during the initial installation process, grub install sequence,
before grub and its menu.lst stanza entries are written to the hard drive. I also edit out all the entries for all found "other OS" because they are almost always misnamed, unneeded, and produce unnecessary clutter. The
UUID of the
resume= also gets deleted and replaced with
LABEL=swap<whatever> at this time, with all my installations.
After first boot, I directly edit my
/boot/grub/nenu.lst to remove the
UUID from the
root= entry of each stanza and replace it with the proper
LABEL=<whatever> for that partition. I also remove the
quiet entry from the boot stanzas and add a
splash=verbose entry. That, and possibly the default
vga=788 being changed to
vga=791, is the only editing done directly into the file at this time. All other edits have already been done during the installation.
