BIOS == Basic Input Output System.
When you turn a computer on you will get a splash screen that that says something like Press F2 to enter setup. F2 could be replaced with ESC or some other button. Depending on who makes the Bios. The Bios is a small assembly language written program that comes on every motherboard. It's purpose is to help launch the operating system. Without a Bios the operating system will not come up. When you enter setup you are entering the Bios configuration file. It lets you set the date and time. It lets you set some of the basic parameters of your motherboard. It lets yu set up the order in which things boot up. Most standard PCs have a floppy drive, CD ROM drive, and a hard drive. YOu can tell your computer to place any of those three devices in a specfic order. The order you place them in effects the order in which the computer bios looks at things when it wants to boot.
If the order is floppy, CD-ROM , and Hard drive. The system will look to see if there is a bootable floppy in the floopy drive if there is it will run the floppy boot program. If there is a non bootable floppy in the drive you will get a display on the screen that says disk read error. If there is nothing in the floppy it will move to the CD-ROM.
Once it hits the CD-ROM it will look for an autorun file. If it finds one it will run that file. If there isn't one it will move to the hard drive. You do not generally get an error read from a CD unless the autorun is corrupt. If there is nothing in the CD-ROM it will move to the hard drive.
The hard drive is where the operating system is permantly stored in most cases. One the motherboard bios reads the hard drive it looks for boot files. If it finds them it activates them causing your system to load windows or whatever operating system you have. If there is no operating system on the hard drive the screen will display No operating system found. This means the hard drive does not have a functioning boot file on the boot sectors of the hard drive or that it can't read the boot sectors of the hard drive. Sometimes a loose hard drive cable will cause this error.
You can set the order to whatever you want. The standard is floppy, CD-Rom, hard drive but that increases boot time and can cause delays if you left a floppy in the floppy drive. It will also cause delays if you left a CD-ROM in the CD drive. You can make it boot directly to your hard drive which will help cut down on boot time (a few seconds) but you will skip any live CDs you have in the CD-ROM.
Okay that is BIOS 101 class. I hope you learned something today.