When you press ENTER on the Hardware Profile/Configuration Recovery menu or the boot loader automatically makes the selection for you, the computer is in the Kernel load phase of Windows NT startup. You see several dots as the boot loader loads the Windows NT Kernel (Ntoskrnl.exe) and the hardware abstraction layer (Hal.dll) into memory.
At this point, the boot loader creates the control set it will use to initialize the computer. The control set is either the Default control set or the Last Known Good control set. The boot loader loads the low-level device drivers based on the ones identified in the control set.