Frank -
You are trying install from the booted Windows 7 installer, both with XP drive connected and not? All peripherals and other HD's unplugged, Custom install using Drive Options to delete, repartition as desired and format before install?
Try running Windows 7 install from the XP desktop to Custom install to the second HD.
If this fails try wiping the Windows 7 HD:
SSD - HDD Optimize for Windows Reinstallation
Next try resetting the BIOS to optimal defaults. While in BIOS setup check the SATA controller setting.
Try removing all but 2gb RAM to try install. Test your RAM:
RAM - Test with Memtest86+