Hi,

   You have to empty another drive ( other than your win7 drive ) to make way for the XP to dual boot in your PC. 

1. Boot from XP cd

2. Select that empty drive when asked for

3. Go through the installation

 4. After completing the XP installaton the PC will ask you to choose the OS to boot from while restarting

And while dual booting a Hard Drive the lower version of the Operating System should be the first OS in the Hard Drive.

ie: XP first Win 7 next.