So you have two HDD's installed in your machine. One of them used to have Win XP installed and it was called "C: ", but you have wiped it clean by Formatting it. The other (I presume newer) is called "E: ", and you have installed Win 7 on it. But your machine will not boot from it. Did I get that all correct?
I see two problems, each with a solution.
1. Your mobo needs to know exactly which HDD it should try to boot from. You set this up in the BIOS Setup screens. To get into that, usually what you do is: boot the machine, and immediately hold down the "Del" key until your monitor shows the BIOS Setup opening menu. (On some machines it is not the "Del" key, so watch the monitor for a message about what key to hold down to enter Setup.) Once you're into BIOS Setup, look at the first screen which will show you both of the HDD's. I assume they are different enough (manufacturer name, size, etc) that you can tell which is which. Now, look for the BIOS screen where you set the Boot Priority Sequence. You will need to set that up so that it tries to boot from your newer drive that has Win 7 on it, and does NOT try to use the old one that has been formatted. Now, many people will actually set this up to try the optical drive first, and then the HDD with Win 7 on it, and then NOTHING else. Use the appropriate keys to Save and Exit, and the system will try to reboot. NOTE that, when this works, the newer drive with Win 7 (your working OS) will be called C: - it will no longer be E:.
2. It still may not boot up, because I suspect you may have been caught by a cautious process in Win 7. This can happen if, when you installed Win 7 on the new drive, you still had the old drive installed in your machine. If that is what you did, the process also installed some semi-hidden backup files on the OLD drive for use in the future in case something got corrupted. BUT the process also means that, every time you boot up, it will look for those backup files on the old drive and refuse to boot if they cannot be found. I bet they were wiped out when you Formatted that drive AFTER installing Win 7. So your machine still can't boot from the new drive. BUT there's a way to fix this. First, disconnect the old drive. Put your Win 7 Install CD in the optical drive and boot the machine from it. Do NOT do a normal Install. Look for a choice to run a System Restore Install. This will place new copies of the backup files on the only HDD installed now (your new one) so it can boot from that drive only. When done, remove the Install CD, shut down, and boot up to be sure it is working. When that works, shut down again and re-connect the old HDD, then boot up. It should boot, and you should be able to find the old HDD in My Computer as an empty unit (maybe named E: by now) you can use.