Install Win7 to Logical partition?

Use Partition Wizard. It is the most important tool we use here which has helped in tens of thousands of complicated partitioning operations we've helped with here without a single failure.

Download the ISO and burn CD using Windows Image Burner.

Unplug the XP drive, boot PW CD to do operations I gave you above, then boot Win7 disk to do the Startup Repairs until Win7 starts.

Thanks gregrocker. These instructions worked. I will recap some of my experience.

On the second page of this thread, I mentioned a "POST" error. I noticed that this error came regardless of whether I was booting to a flash drive or to the intended drive. Disabling the main SATA drives in the bios (not just removing from the boot sequence) got rid of this error. I lack a more in-depth analysis, but it is clearly separate from factors related to a drive's MBR and such. So that was a red herring. For anyone repeating this procedure, I would suggest disabling the main SATA drives in the BIOS in the first place, as opposed to unplugging them and dealing with this error.

I installed Partition Wizard's Home bootable CD to a flash drive using Rufus.

Next, I disconnected the old drive and booted into the Partition Wizard. It worked exactly as other users said it would. It offers a full graphical interface the same as what you see when ran as a program within Windows. In this mode, it fully allowed me to set the partition as primary. It also allows setting it as active.

With the partition set as primary and active, I went into my Win7 bootable flash drive and ran the repair utility. Notably, within the "System Recovery Options", it just claimed to find problems at first.

After those changes were applied, and I booted into the Win7 bootable flash drive again. The options being presented looked different this time. it detected the specific operating system. More options followed after that, which included "Startup Repair". That gave a detailed "Diagnosis and repair details" log, which gave a list of "Root cause found". One of these included "Boot sector repair".

That was clearly encouraging, and after that the computer booted using only the new drive without throwing any errors.

Yes, that's the way it works best: Mark the Primary System Reserved or C partition Active, then run Startup Repair - Run 3 Separate Times to make sure it takes care of everything, the last repair being rewriting the Repair My Computer console to F8 Advanced Boot Options. Make sure you have that now.

Previously we had no more automated solution since Bootmgr - Move to C:\ with EasyBCD
did not rewrite Repair to F8, but this appears to now have been added so it is an acceptable automated method. However you'd have to have a Primary partition marked Active first.

Good work, Alan!