The Hardball Times blog lists 25 trade targets and has this to say about Ted Lilly, who they rank sixth on their list (really, fifth, since #2, Dan Haren, has already been dealt):
A free agent after this season. The Dodgers, Mets and Twins have all been linked to Lilly. A great start on Wednesday day night against the Astros only ups his stock. Word is, the Cubs would like to trade Lilly before his next scheduled start on Tuesday.
However, tracing back the links from that one leads you, eventually, to the source, which is this Chris DeLuca article from Friday’s Sun-Times, in which he states:
With contenders struggling to find the right match for available starters Roy Oswalt and Dan Haren on the trade market, interest in Cubs left-hander Ted Lilly has stepped up dramatically and a trade could be completed by the end of the weekend, major-league sources said Friday.
Which, given that this is now Monday afternoon, obviously has not happened. We await further developments, or breathless rumors, or both, not necessarily in that order.