If you want to install two operating systems on your computer then you can either repartitioning your hard disk for installing two operating systems or you can use two separate hard disk for this purpose. Before installing two operating systems on the same computer please make sure how much disk space each of the operating system requires.
I think 32 bit windows 7 requires 1 GB of RAM, 16 GB of disk space and 64 bit windows 7 will require 2 GB of RAM, around 20 GB of disk space. For installing XP on your computer it will require 256 MB RAM and 6 GB of disk space on your hard disk. So you computer should have more than 22 GB of free disk space for both of the operating system. If your computer does not have this minimum requirements you can use an additional hard disk for installing the second operating system.
If you want to install both operating system on the same hard disk you can repartitioning your hard disk. For that you can use any disk partitioning software or you can reformat and repartitioning your hard disk. For installing the windows 7 you should format the partition with an NTFS system.
For creating and formatting your partition you can select the start button and then you can select the control panel, from the control panel you can select the administrative tools. In the administrative tools you will find the computer management option. You can double click on the computer management and then from the available options you can select the storage.
You can select the unallocated space on you hard disk and then you can select the new simple volume after that you can select next and then you can enter the volume required in MB or use the default value, then you may enter the disk letter or use the default letter and then you can click next. Then you can select finish next this will create a new partition and will format that partition.
Your computer should have the oldest operating system installed first in this case you should have the windows XP installed first on your computer. Then you can create a partition and format that partition into NTFS file system for installing the windows 7 operating system. You can then insert the installation disk for the windows 7 into the CD drive, and then you can click on the install now option. Then you can enter your product key when it is asked by the computer. And when it asks for which type of installation is required you can select the custom option.
Then when it asks for where to install the operating system you can select the new partition that you have created. After that you can select next for starting the installation. You can choose which operating system should be used for booting. For that you can select the start button and then select the control panel and then you can select the administrative . There you will find the system configuration, you can double click on it and then select the boot tab, there you will find the installed operating systems, you can choose the one required and then press ok.
I suggest you install a VMware workstation. This software would help you install two or more OS and run it simultaneously. I've been using this software for almost a year. I have to OS running on my machine (Windows XP and Windows 7). Before that, first try to check if you computer spec meet all the system requirements needed to run the VMware software and the OS you want to install. You can also read more about VMware workstation from the link.
Using VMware workstation is the most reliable and best way of running multiple OS. It works on a 32 and 64 bit machine. Installation is just simple, you can use ISO file or a bootable CD. I can provide you some instruction if needed.
Please watch this video for a tutorial of downloading and installing VMWare Workstation 8: