So in short the findings are the kit will be shown as a single line in the sales order No matter the type of the components that has been added to this kit.
even if the item is inventory lot or serial in the KIT it will be shown only in a single line in the sales order.
If the Kit item contain only inventory item then in the item fulfillment It will be shown as only a single line with the kit item name.
if the kit item contains lot or serial number inventory items then in the item fulfillment it will be shown as separate lines.
if the kit have parent child relationship with other kits then in the item fulfillment it will show in a hierarchical manner depending upon the type of components that kit has.
the display components checkbox in the Kit item record doesn’t have an implication in showing the items in transaction lines and that will be mainly used for the printouts.