The safest way is format D: drive to clean out Windows XP, and use it for whatever purpose you want to.
If you want to merge the Windows 7 partition with it, I recommend using gparted.
You can download it here:
http://gparted.sourceforge.net/livecd.php
You need to make a bootable CD or USB to use it (instructions are on the website).
If you have no other laptop/system at your disposal, you can download a Ubuntu live CD, which will contain it as well as other utilities - eg. browser etc. which can help you connect to the web if you need help inbetween.
GParted is very good - it has similar interface as the Windows disk manager but gives you more power. With it you can move/merge the Windows 7 partition with ease.
Of course, though nothing will go wrong unless your hard disk fails in the middle, before this it is recommended to backup any important data that you cannot reproduce! **Can't stress this enough!**