Bleh. I hate being sick. attempting to follow your steps now.
---------- Post updated at 12:50 PM ---------- Previous update was at 12:21 PM ----------
I don't have qemu, and haven't figured out how to build pistachio yet, so I just used one of the many pre-built example disks they have on their
download page. They come with grub and work fine and should be an excellent base to build your own project with. It's vfat, not ext2, but considering you're on a floppy disk... If your qemu refuses to boot one of those boot images, then it's a problem with qemu. If it's just a problem with your own image, it's a problem with this software, with which I have no experience.
---------- Post updated at 12:57 PM ---------- Previous update was at 12:50 PM ----------
The 'make menuconfig' doesn't even recognize my escape key so I can't leave menus, and I have no idea what kernel options you built your kernel with anyway.