Incorrect! You should review the tutorial on how to set up an XP/7 dual boot. Dual Boot Installation with Windows 7 and XP
When first setting up the 7 beta on a second primary with XP on the first XP's primary had to be mounted and assigned a drive like D often recommended for dual boots. The version you are booted into at the time will usually be C unless you start the installer for a custom installation while booted in the older version which would be Vista not XP.
In most cases a simple install of 7 after XP described in Method #1 will simply end up seeing the option for XP in the 7 boot options as "previous version of Windows" with the XP boot files on the root of the same drive when both are installed there.
If installing 7 to a second drive while the XP drive is unplugged you would have to copy the XP boot files over to the root of the 7 primary as well as edit the 7 boot loader being the BCD store to see the new entry added in.
With any second installation of Windows even with the same version drive letters will be offset seeing the D usually taken by the optical drive for a single hard drive system bumped to E. The other installation of Windows will be seen as D, F, G, H, or I depending on how many drives even usb drives and devices are present.
Actually you can see how that can look with the image of the several drives in use here.