Did Allah create the souls of all human beings at once and take a covenant from them at that very moment that He is their Lord?

There are two interpretations for the verse: "And [mention] when your Lord took from the children of Adam - from their loins - their descendants and made them testify of themselves, [saying to them], 'Am I not your Lord?' They said, 'Yes!'" (Al-A'raf/172):

The first interpretation: The meaning of "He took their descendants" is the creation of generation after generation, and the witnessing (testimony) is by means of the clear proofs of Allah's Lordship, and "They said, 'Yes!'" is through their state (i.e., their very existence testifies).

The second interpretation: Allah brought forth all the descendants of Adam from the loins of their fathers in the form of particles, and made them testify vocally, "Am I not your Lord?" They said, "Yes!" This view is supported by the Qur'an, the Sunnah (definition), and the narrations of the Salaf, including Ibn Abbas and Ubayy ibn Ka'b.

The well-known meaning among the Salaf is that Allah gathered Adam's progeny at the beginning of creation, in their forms or spirits, and made them testify about themselves, whereupon they affirmed. However, no one remembers this covenant.

Shaykh al-Islam Ibn Taymiyyah chose the other view, which is that this witnessing and affirmation is the creation of humans upon the monotheistic natural disposition (fitrah (definition)), before they deviate to other religions. He mentioned that the hadith (definition) about them speaking and testifying has not been proven by an authentic marfu' hadith attributed to the Prophet (peace be upon him), and that the verse does not indicate it.

And Allah knows best.