2 Separate bootable HDD and OS.

Have two HDD, one with win7 professional 1TB SATA and other older win XP sp3 160gb SATA. To keep working environment separate, I use one HDD at a time, disconnecting other HDD. It used to work fine except 2 days back, when I had shut down winXP 160GB HDD with hibernation and after detaching that sata cord and reconnecting 1 TB sata cord, there was a major startup failure. With win7 DVD RE, after opening system recovery dialogue box, no options were working including startup repair, system image recovery and system restore. In command prompt, c drive could not be detected. However, after bootrec.exe/fixmbr win 7 started but is a bit slower.
How to avoid this problem? Does hibernation of one HDD interferes with startup of other HDD even though no RAM changes take place?. Does frequent change of HDD like this cause hardware/software damage?
Specs - Core 2 duo 1.83ghz, 946gzis mb, 2gb RAM, ATI radeon 4850 512mb, VIP 600w smps.

Boot by setting the preferred HD as first HD to boot in BIOS setup, after DVD drive.

Then if you want to boot the other HD, use the one-time BIOS Boot Menu key given on first boot screen or in Manual to trigger the other HD during boot. Every computer/mobo has one.

If performance problems persist run a Repair Install with the other HD temporarily unplugged.

I use only one HDD at time with other HDD always unplugged to avoid all other issues. My problem is in spite of that, when I switch to win 7 HDD from win XP HDD especially after hibernation, why win 7 HDD should have problem starting when XP HDD is already disconnected? Does it mean that XP HDD writes something on mobo bios or RAM which doesnot allow win 7 to work ?

Try booting each HD separately without unplugging the other HD.

Use the BIOS Boot Menu so you don't have to connect the two HD's. Of course, you can still to explore to the other HD in Computer, however you can even hide the other HD by removing it's letter in Disk management.