It used text mode with NT for the first part, then followed up with a Win 9x and Win XP based step 2 and 3 that were themed like the Win XP login screen. Really neat tbh.
There's no Win 9x phase in Win XP setup, of course. :) There's optional DOS phase, then text-mode phase (running NT kernel under the hood, but UI is in VGA text mode), and then finally GUI phase of the setup.