Can someone please clarify EXACTLY what I am supposed to do on the HTML sitemap tab. When I generate the sitemap from this page, what is the name of the file and I am not quite understanding what it means to add a link to root page in step 3. Would someone help me understand this a bit better. Thanks so much for any help.

Please see page 13 of the Sitemap Generator Quick Start Guide:
http://www.iarchitect.net/Common/Documents/SGQuickStartGuide.pdf

In a nutshell, the HTML sitemaps are webpages that are generated and simply list every URL for your website.
They are generated to <application installation path>\sitemaps\<website>\html\
If you have 100 or less URLs, one file will be generated named "sitemap.htm".
If you have more than 100 URLs, a page for every 100 URLs will be generated name "sitemap<n>.htm" where "n" is a sequential number.
Then, an index file will be generated named "sitemap.htm". This file lists links to the other pages generated.