Are you booting from the XP installer to create and format the partition where you are attempting to install it? There is a slightly different partition table in Windows 7 so it will need XP formatting.
Use the second method in this tutorial to make sure you are following the steps correctly to install, then configure XP boot when installed after Windows 7: Dual Boot Installation with Windows 7 and XP
It is always best to do these dual boot installs on separate drives if you have that option. Then to remove an OS all you have to do is unplug the drive, set the other one active and to boot first in BIOS, and possibly run Startup Repair 3 times to rewrite the MBR.
You can run either OS without any boot dependency on the other by keeping Windows 7 unplugged while you install XP on another drive. Then when you plug the Windows 7 back in after XP install you decide which OS to boot by using the BIOS BootMenu F-key (given on first screen) to set which drive to boot first.