Putting an XP HDD on a modern motherboard will just give you BSODs. Just build the new machine and load Windows 7 fresh.
Once the new installation is done, then you can attach the HDD and either format it or if you want the data, just delete the Windows folder that has XP.
If you want to use the old drive as your new system drive, attach the drive, put your Windows 7 install disk in the DVD, and start it up (change the bios to AHCI if it isn't by default), and do a custom install, first unpartition all existing partitions and then let Windows 7 install to the single remaining unallocated space. Win 7 will clean everything out and install to the old drive.