If you want to dual-boot both OSes, rather than overwrite the installation of Win7, there are issues with boot when you install the older OS second.
Are you trying to replace or dual-boot? If dual-boot, are you putting each on a separate drive or both in separate partitions on the same drive? Laptop or desktop? With details, we can be more specific.
A little more detail on "hard disk not recognizing" would be helpful. Is this when you try to do the install, or after, when you try to boot XP?