MET/VEGFR2 Inhibitor GSK1363089 and Erlotinib Hydrochloride or Erlotinib Hydrochloride Alone in Locally Advanced or Metastatic NSCLC That Has Not Responded to Previous Chemotherapy

DISEASE CHARACTERISTICS: * Histologically or cytologically confirmed non-small cell lung cancer (NSCLC), meeting all of the following criteria: * Locally advanced or metastatic disease * Failed 1-2 prior chemotherapy regimen * Must be eligible to receive erlotinib therapy (i.e., patients must have received 1-2 prior chemotherapy regimen \[combination unless patient is ≥ 70 years\]) for advanced or metastatic disease * No plan to receive further palliative cytotoxic chemotherapy * EGFR-expression status positive or unknown * Patients who are known to have tumors that are EGFR negative on IHC are not eligible * Presence of clinically and/or radiologically documented measurable disease * At least 1 site of disease must be unidimensionally measurable as follows: * Chest X-ray ≥ 20 mm * CT scan (with slice thickness of ≤ 5 mm) ≥ 10 mm (longest diameter) * Physical exam (using calipers) ≥ 10 mm * Lymph nodes by CT scan ≥ 15 mm (measured in short axis) * Measurable lesions must be outside a previous radiotherapy field unless disease progression has been documented * Must have archival tissue available or undergo a biopsy or FNA prior to registration/ randomization * No appreciable cavitation in central thoracic lesions * Patients with overt bleeding from any site (\> 30 mL bleeding/episode) within 3 months of study entry are not eligible * No untreated brain or meningeal metastases (CT scans are not required to rule this out unless there is a clinical suspicion of CNS disease) * Patients with treated and radiologic or clinical evidence of stable brain metastases, with no evidence of cavitation or hemorrhage in the brain lesion, are eligible providing that they are asymptomatic and do not require corticosteroids (must have discontinued steroids ≥ 1 week prior to entry) PATIENT CHARACTERISTICS: * ECOG performance status 0-2 * Patients must have discontinued smoking for ≥ 2 weeks prior to registration, and must be prepared to refrain from cigarette usage until completion of the pharmacokinetic sampling at the end of study course 1 (approximately 6 weeks in total) (Phase I only) * Granulocyte count (AGC) ≥ 1.5 times 10\^9/L * Platelet count ≥ 100 x 10\^9/L * Serum creatinine ≤ 1.5 times upper normal limit (UNL) OR calculated creatinine clearance ≥ 50 mL/min (≥ 0.83 mL/sec) * Bilirubin ≤ 1.5 times UNL * ALT and AST ≤ 2 times UNL * No clinically relevant hemoptysis (\> 5 mL fresh blood) within 4 weeks prior to study entry * Patients with only flecks of blood in sputum are permitted * No other invasive malignancies, unless curatively treated with no evidence of disease * Not pregnant or nursing * Negative pregnancy test * Fertile patients must use effective contraception during and for 90 days after completion of study therapy * No untreated and/or uncontrolled cardiovascular conditions and/or have symptomatic cardiac dysfunction, including any of the following: * Unstable angina, congestive heart failure, or myocardial infarction within the previous year * Cardiac ventricular arrhythmias requiring medication * History of 2nd or 3rd degree atrioventricular conduction defects * Patients with a significant cardiac history (even if controlled) or prior doxorubicin exposure are required to have a LVEF \> 50% * Patients with proliferative diabetic retinopathy, retinal arteritis, or hemorrhage must undergo full ophthalmological examination prior to entry to this study * Must have resting systolic BP ≤ 150 mm Hg and/or diastolic BP ≤ 100 mm Hg (in the presence or absence of a stable dose of anti-hypertensive medication) * No poorly controlled hypertension * No history of labile hypertension or poor compliance with anti-hypertensive medication * No GI tract disease resulting in an inability to absorb oral medication, including any of the following situations: * Uncontrolled inflammatory GI disease (e.g., Crohn's disease, ulcerative colitis) * Post-surgical malabsorption characterized by uncontrolled diarrhea that results in weight loss and vitamin deficiency or requires IV hyperalimentation (use of pancreatic enzyme supplementation is allowed) * No active or uncontrolled infections * No serious illnesses or medical conditions that would not permit the patient to be managed according to the protocol * No known hypersensitivity to the study drugs or their components PRIOR CONCURRENT THERAPY: * See Disease Characteristics * No more than two prior chemotherapy regimens for metastatic NSCLC (excluding adjuvant chemotherapy) * Recovered from any treatment-related toxicities prior to randomization * Persistent cisplatin- or taxane-induced sensory neuropathy ≤ grade 2 is acceptable * No prior therapy with agents acting on the EGFR pathway * No prior therapy with a c-Met inhibitor * At least 21 days since the last dose of chemotherapy * At least 21 days since last fraction of prior radiation therapy * Exceptions may be made for non-myelosuppressive radiation to peripheral areas * More than 14 days since prior major surgery, provided that wound healing has occurred * More than 3 weeks since prior and no other concurrent investigational drugs or anti-cancer therapy * No concurrent CYP3A4 enzyme inducing or inhibiting drugs known to interact with erlotinib hydrochloride, including any of the following: * Enzyme-inducing anticonvulsants * Rifampicin * Rifabutin * St. John wort * Atazanavir * Ketoconazole * Patients with a history of pulmonary embolus or a deep vein thrombosis diagnosed and/or treated within 6 months prior to registration will be excluded.