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I heard that BIOS shadowing works by copying the BIOS program into faster memory and running it from there. Is that correct? BIOS is responsible for certain startup tasks, so after startup, does it get unloaded from memory?

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You are correct BIOS shadowing simply loads the BIOS into Memory for quicker reference. I could not find much use for it after startup, however according to Microsoft it will stay in memory after startup. Apparently DOS used the BIOS to write to the screen. From the MS article:

ROM BIOS shadowing is the process of copying the BIOS from ROM into RAM and using either hardware or 386 enhanced mode to remap the RAM into the normal address space of the BIOS. Because reading RAM is much faster than reading ROM, BIOS-intensive operations are substantially faster. For example, MS- DOS uses the BIOS to write to the screen; therefore, with ROM BIOS shadowing, directory listings run more quickly.

Windows NT does not use the BIOS (except during startup); therefore, no performance is gained by shadowing. If ROM BIOS shadowing is not used, more RAM is available. With Windows NT, there is an advantage to disabling the ROM BIOS shadowing option.

This article is a little old but still relevant since newer versions of Windows do not reference the BIOS after boot. Source

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