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