Ok it does look a bit odd but it is working
As others have said, there is nothing at all wrong with your configuration. Adding Win7 as a second OS to an existing WinXP environment can do exactly what you've got... Win7 installed into a logical partition. There is absolutely NOTHING WRONG WITH THIS.
There is no need to change your Win7 partition to "primary". It's fine as "logical".
and does this explain the prompt to format drive E ?
This is really the issue.
When does this prompt get issued? Only at boot time? Is it completely unusable under Win7?
Is the partition usable when you boot to WinXP with no complaints from WinXP?
I guess the only way to change a partition to a primary drive is during the formating process ?
Forget this whole discussion. There's nothing wrong with your Win7 and WinXP partitions at all. The mystery is strictly regarding this prompt to format E.
You say the first partition should contain the boot information , how is that done , that is how do I load the boot information on that partition ?
It's already installed into your WinXP partition, which is marked as "active".
When you added Win7 as the second OS into the existing WinXP environment, the Win7 installer placed its own boot manager files into that "active" partition (i.e. the WinXP partition) and created the boot manager menu offering both your old WinXP and the new Win7 as boot choices.
It's currently working perfectly, as you say. There is nothing for you to do.
Again... the mystery to be resolved is just as you originally asked: why does E request formatting when you boot to Win7?
Can you please provide any further details or observations about when/why you get that "request to format" your E partition.