Before we make any specific recommendations will you please post a snip/screen-shot of the entire disk management drive map with a full description as to which drive/partition is which, so we can see what you have going on as there may be a fairly simple way to resolve the situation.
In the Windows start menu right click computer and click manage, in the left pane of the "Computer Management" window that opens click disk management and post a maximized snip of that.
Boot the WIn7 installer to Custom install to C, using Drive Options to format the partition first as shown in these illustrated steps: Clean Install Windows 7
Since Win7 will overwrite the XP boot files which were placed on C during XP install, after WIn7 install you will need to install EasyBCD 2.02 to add XP on the Add OS tab: Accept offered XP boot files, let it autocomplete the XP drive letter, Save and restart to Dual Boot Menu. EasyBCD 2.0.2 - NeoSmart Technologies