Whenever you install Windows 7 be sure to boot the installer as shown in Clean Install Windows 7
so it will always be C when you are booted into it. Since you installed from XP you are now stuck with D as your drive letter. For many that would be enough reason to reinstall correctly.
If you wish to reinstall let us know so we can advise you how to use free Partition Wizard bootable CD to delete D and resize the Logical container to the right to make more room for Windows 7 install.
However if you want to keep your current install you can create the 200mb System Reserved boot partition since the Windows 7 boot files can only reside on a Primary partition, then resize D to the left to have more space.
Or you can use Partition Wizard CD to convert D to Primary, mark it Active to run 3 Startup Repairs to write the System boot files to the partition, resizing it at the same time all the way to the left if you desire.
Let us know which you wish to do and we'll give you any additional steps needed.