Boot the XP, during setup select the partition where XP is installed and delete, recreate and full format, or just full format:


XP will steal the boot from Windows 7, so follow the steps in Method Two here to restore the Dual Boot:
Dual Boot Installation with Windows 7 and XP
If there are problems, restore the boot to Windows 7 by marking it Active, booting the Windows 7 DVD or Repair CD to run
Startup Repair up to 3 separate times with reboots until Windows 7 starts, then install EasyBCD 2.02 to add XP to Dual Boot.
Partition - Mark as Active