Answers inline. :)
Okay, so the problems also applies to two completely independant and separately installed OS'es on different physical drives then? Fair enough. I was hoping that maybe "dual boot" referred only to systems where the new OS had been installed while the old OS was connected, so that they share a boot sector or whatever it's called, and had an automatic dual boot screen on each startup.
Yep, it doesn't matter if XP and Windows 7 were installed on the same drive on different partitions, or installed on two separate drives.
The issue happens when XP is able to see the Windows 7 partition or drive,
and/or system protection is turned on for both the XP and Windows 7 drives/partitions in the same OS.
You're not saying the problem could be prevented by turning of XP's system protection, are you? (I'm pretty sure you're not, I just want to be certain.)
No. You just don't want to have system protection turned on for both the XP and Windows 7 drive in the same OS.
In XP, only have system protection turned on for the XP drive, and not for the Windows 7 drive.
In Windows 7, only have system protection turned on for the Windows 7 drive, and not for the XP drive.
Am I right in assuming that the problem only relates to existing restore points, and not future ones? I mean, if I only boot into XP once, and then only use 7 for the next three months, then at that time, 7 should have 3 months worth of working restore points, right?
Somewhat. Any existing restore points for both OS's get deleted whenever you startup into the other OS. Otherwise the restore points will be available until you startup in the other OS.
Finally: Does booting into win7 with the xp drive visible also delete the xp's restore points?
No. You would only need to hide the Windows 7 drive from being seen by XP to stop this. XP is not affected if Windows 7 is able to see the XP drive.