The XP mode is still 64 bit but I have software that will not load and requires 32 bit, which I was hoping to get on a separate installation on a separate partition.
That is simply not true. It is the 32-bit version of XP; I know, I have installed software that does not run on any 64-bit version of Windows.
Now, you do realize that you need to install the software INSIDE XP Mode, right? In other words, while XP Mode is running insert your CD (or download the install file into XP mode) and run the install file from inside XP Mode.