Sata drive

When you run 7 and XP on the same system, it causes many conflicts, and does not work. And so several others have already reported the same problem you are describing.
The best thing to do is reformat the entire drive and do a fresh install of XP. OR replace the hard drive and do a fresh install of XP. I think you will need to replace the drive.
So we have heard many times, and others disagree, once you load 7, you cannot go back to XP. Windows allows you to go forward in OS, but never backwards. And so that I suppose is the problem that is occurring. So I have been told, when you reformat a drive, it does not erase the entire drive. There is a proprietary region on the drive that does not erase. And once this region has been loaded as 7, it will not allow XP to be installed.
And so our college instructors have agreed and taught us, always forward, never back.
I once took XP off a drive and set it back to windows 2000. That in itself was an adventure, and very challenging. It finally did work using 2000 OS with XP drivers installed. And that was not easy.
And so others disagree, I still have not seen anybody do it successfully, although they claim they could.