The system recovery options environment is different from Windows. Your system drive may indeed by drive D: because it does not determine the drive letter the same way as inside Windows. It starts by partition. There is usually a hidden System Reserved partition where the boot information resides. That becomes drive C:. The next partition is usually the system drive. That drive is now drive D:.
I am attaching an image to try to make things clearer (mine has a hidden partition for the factory image that is C:, then the System Reserved is drive D:, and then the System drive is drive E: ).
The letters as seen by Windows are shown in black. The letters as seen in the system recovery options environment are shown in red. Does that help a little?