There should be no problem with deleting E to remove XP, once you have any files you want to save moved off of it. Then you can create a new storage partition there.
If you were booting via the BIOS then there is no Dual Boot menu entry to remove.
If you had added XP from Windows 7 using EasyBCD then the listing should go away when XP partition is deleted, and if not can be deleted from the Edit Boot Menu tab in EasyBCD from Windows 7.