The reason for the error 17 message when you select Linux to boot is the
Code:
title Ubuntu 7.10, kernel 2.6.22-14-generic
root (hd0,3)
kernel /boot/vmlinuz-2.6.22-14-generic root=UUID=2a9440eb-d82d-4b81-b9f1-e76d4997e184 ro quiet splash
initrd /boot/initrd.img-2.6.22-14-generic
quiet
The (hd0,3) is pointing to the extended partition rather than your Linux partition. Try at the grub menu press escape to exit the menu, select the first menu item, press e to edit, select the (hd0,3) line and press e and change the line to (hd0,2) press enter then b to boot. See if Linux will start.
Ed: if this works once you have Ubuntu running you can change the grub menu to allow you to boot in future by using
Code:
sudo nano /boot/grub/menu.lst
and change the (hd0,3) to (hd0,2).
The setup you have does not look to be that which Ubuntu would install by default ... not sure how much RAM you have in the system but if its less than 1GB I'd consider changing your partition structure to allow swap and home area creation and do a fresh Ubuntu install selecting manual partition ... let us know if you want a bit more guidance on this - there is a good partition editor on the live CD.