Carboplatin and Paclitaxel Albumin-Stabilized Nanoparticle Formulation Followed by Radiation Therapy and Erlotinib in Treating Patients With Stage III Non-Small Cell Lung Cancer That Cannot Be Removed By Surgery

DISEASE CHARACTERISTICS: * Histologically or cytologically confirmed non-small cell lung cancer (NSCLC), including any of the following histologies: * Squamous cell carcinoma * Adenocarcinoma (including bronchoalveolar cell) * Large cell anaplastic carcinoma (including giant and clear cell carcinomas) * Must meet the following criteria: * T1-3 with N2 and selected N3\* * T4 with N0, N1, N2 and selected N3\* * M0 (no M1 patients) NOTE: \*Patients with contralateral mediastinal disease (i.e., N3) are eligible, provided all gross disease can be encompassed within the radiation boost field in accordance with the homogeneity criteria. Patients with ipsilateral scalene or supraclavicular disease are also eligible. Patients with contralateral hilar or supraclavicular node involvement are not eligible. * Must have measurable disease, defined as ≥ 1 unidimensionally measurable lesion ≥ 20 mm by conventional techniques or ≥ 10 mm by spiral CT scan * Nonmeasurable lesions include the following: * Bone lesions * Leptomeningeal disease * Ascites * Pleural or pericardial effusion * Abdominal masses that are not confirmed and followed by imaging techniques * Cystic lesions * Tumor lesions situated in a previously irradiated area * Patients must be considered unresectable or inoperable AND be deemed candidates for combined modality therapy by a medical oncologist and a radiation oncologist * Considered to be poor-risk with NCI CTC performance status (PS) 2 OR PS 0-1 and ≥ 10% weight loss within the past 3 months * Patients with tumors adjacent to a vertebral body are eligible, provided all gross disease can be encompassed within the radiation boost field in accordance with the homogeneity criteria * Pleural effusions meeting the following criteria allowed: * Effusion is transudate, cytologically negative, and non-bloody * Effusion can be seen on the chest CT scan but not on the chest x-ray AND is too small to tap * Effusion appears only after a thoracotomy or other invasive thoracic procedure was attempted PATIENT CHARACTERISTICS: * See Disease Characteristics * Granulocytes ≥ 1,500/μL * Platelet count ≥ 100,000/μL * Creatinine ≤ 1.5 x upper limit of normal (ULN) * AST \< 2 x ULN * Bilirubin ≤ ULN * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use effective contraception PRIOR CONCURRENT THERAPY: * No prior chemotherapy or radiotherapy for NSCLC * At least 2 weeks since formal exploratory thoracotomy * No concurrent administration of sucralfate suspension and erlotinib hydrochloride * No concurrent intensity-modulated radiotherapy * No concurrent hormones or other chemotherapeutic agents except steroids given for adrenal failure, hormones administered for non-disease-related conditions (e.g., insulin for diabetes), and intermittent use of dexamethasone as an antiemetic * No concurrent palliative radiotherapy