If there was ever a time to clean reinstall Windows, now is it with the best OS ever. Why import corruption which has built up in XP or Vista?
If you need to store your data, send it over the network to a folder you create in another computer's C drive.
Or in Disk Management, create a partition large enough at the end of your HD to store all of your User folders, or just drag your named User folder into it: Partition or Volume - Shrink Partition or Volume - Create New
If you have a Recovery partition on the computer make your Recovery disks so you have a path back to XP factory install, so now you can delete it to use the space for Windows 7. Ditto any OEM partition which will lose its links with a clean reinstall anyway, plus Windows 7 has better utilities than the useless factory utilities.
So now you can boot the Windows 7 install DVD, select Custom, then Drive Options, carefully delete all partitions except the data partition
you've made which you can identify by its size and placement on disk. In the deleted space, create new partition(s) as you wish, format each one except the data partition
before installing Windows 7 to first partition. Clean Install Windows 7
When you boot the Windows 7 install DVD it will scan the HD to see XP and allow use of the Upgrade version Product Key, even if you then go on to delete and format the XP partition, which I would do.