As with other Windows Operating Systems, when you turn on your PC, it goes through an elaborate boot up process. It begins when the computer performs the POST (power-on self test), followed by the POST for each adapter card that has a BIOS, for example, your video card. The BIOS then reads the MBR (Master Boot Record) which is in the first sector of the first hard disk and transfers control to the code in the MBR which is created by the XP Setup. This is where Windows takes over the startup process.

What comes next? Here's what happens:
The MBR reads the boot sector which is the first sector of the active partition.This sector contains the code that starts Ntldr which is the boot strap loader for Windows XP. The first role of Ntldr is to allow full memory addressing, start the file system, read boot.ini and put up the boot menu. IMPORTANT: Ntldr must be located in root folder of the active partition along with Ntdetect.com, boot.ini, bootsect.dos (for dual booting) and Ntbootdd.sys (needed with some SCSI adapters).
Selecting XP from the boot menu causes Ntldr to run Ntdetect.com to get information about installed hardware. Ntldr then uses the ARC path specified in the boot.ini to find the boot partition. The one where Windows XP is installed. It might look like this:
default=multi (0)disk (0)partiton (2) WINDOWS
[operating systems]
multi(0)disk(0)partiton(2)WINDOWS="Microsoft Windows XP Home" /fastdetect
Ntldr, then, loads the two files that make up the core of XP: Ntoskrnl.exe and Hal.dll. These files must be located in the %SystemRoot%System32 folder.
Ntldr reads the registry files, selects a hardware profile, control set and loads device drivers, in that order.
Then, Ntoskrnl.exe takes over and starts Winlogon.exe which starts Lsass.exe (Local Security Administration), this is the program that displays the Welcome screen (If Professional Edition-the Windows Log On dialog box), and allows the user to log on with his/her user name and password.