The 200mb holds the boot files for both Windows 7 and XP. I would delete it to recover MBR into Windows 7, then resize Windows 7 into it's space, make it smaller and create a new XP partition and possibly logical data partition to the right of Windows 7. To do this, back up your files and a Windows 7 system image externally as resizing operations can fail
. Make your Recovery Disks if possible from hidden Recovery partition. Boot Partition Wizard CD
, choose 1 for screen resolution, rightclick 200mb>Delete, OK.
Now right click Windows 7 partition>Modify>Set to Active, then rightclick Resize>drag left border over deleted 200mb space, then drag right border to make room for XP, poss. logical data partition, OK.
Right click unallocated space to create, format XP Primary partition, OK. Ditto Logical Data partition if you wish. Now apply all steps. If necessary, you may need to break these steps into two separate groups.
Boot into Windows 7 DVD Repair console, click through to Recovery Tools to run Startup Repair up to 3 separate times to rewrite MBR to Windows 7 partition.
Install XP, adding it to Dual Boot Menu by following the steps in Method Two here: Dual Boot Installation with Windows 7 and XP