Instead of worrying about installing XP go ahead and install XP then install Win 7 in a dual boot configuration. That way you will have both, and if you have any programs that have a problem with Win 7 and not XP then you will the wonderful world of both OSs.
But, remember XP has to be installed first (always).
By doing it this way you can get by with HP ($49.95 Upgrade) and not have pay $99.95 for the upgrade Pro version which would allow you to use MS VM with Virtual XP. Just trying to help you save money since you already have a copy of XP.