That depends, but it's usually a good idea to assume full data loss.
The NTFS filesystem has not changed since Windows XP SP1. If you reinstall your operating system without repartitioning the drive, it may retain old files. This is normal for upgrades or reinstallations, but it is not normal for downgrades.
When using a motherboard with EFI firmware and a 64 bit version of Windows 7 or Windows 8, a GPT boot scheme will be used. On motherboards with BIOS firmware, 32 bit versions of Windows 8 and Windows 8, and all versions of Windows XP and Windows Vista, a MBR boot scheme will be used.
If your drive was initialized with a GPT scheme, the Windows XP installer will not know how to interpret it. You will have to delete the partitions and reinitialize the drive.
It would only cause loss of data on the partition where you will install Windows XP on. On that note, I would not recommend downgrading to Windows XP from Windows 7.
I agree with you totally that not to downgrade from Win 7 to Xp, as the time is coming soon when the Xp will be rendered on the mercy in the wild and every thing has it time so it is better to keep Win 7