I recommend using 2.6.15 kernel with "make menuconfig" if genkernel fails.
The "make" way works fine here
Quick and dirty tutorial :
add a link on your linux 2.6.15 kernel (if it does not exists)
then go in /usr/src/linux
copy a default .config file from install CD like this :
zcat /proc/config.gz > ./.config
Then do "make menuconfig" and enable/disable any module/thing you want for your kernel.
Then "make all modules_install"
Copy you kernel from /usr/src/linux/arch/ppc/boot/images/zImage.chrp to /boot/ssq-favorite-2.6.16-kernel
That'all.