Hello Peter, and welcome to Seven Forums.
If you are trying to install XP from within Windows 7, then this is the problem. It needs to be installed from boot instead. The tutorial below may be able to help you some with this for now. Since this seems like a OS installation issue, you might consider posting this issue in the Installation & Setup
forum area instead to get more specific help on it. Dual Boot Installation with Windows 7 and XP
Hope this helps for now,