The first question is WHY? If it is for some older programs, there are work arounds. such as using compatability mode when installing, or a virual box to run them in.
Any way, remocmend method.
(1) create a windows system retore back up - makes it easy to revert back to windows 7.
... Under control panel select create a image of your System drive (C Drive). You can put his image on a 2nd HDD, a Usb HDD, or on DVDs.
(2) Back up all of your data as you will wipe the drive.
(3) go to MB manuf (or laptop manuf) support website and down load ALL need Drivers. Windows XP has very poor native support compared to Windows 7
(4) Insert XP installation disk and select custom install, DELETE all partitions. NOTE if it will not let you, then insert a Win 7 disk and again select custom install and Delete ALL partitions. Exit win 7 installation and re-insert Win XP disk.
(5) Complete win XP installation.
ADDED: based on above post.
If you want to daul boot win 7 and XP - I do not recommend that method. Reason - Requires a software boot manager that if a problem develops can prevent booting to either system.
(1) Buy a small HDD (ie 320 Gig -> 500 gig) only about $50.
(2) disconnect Win 7 HDD, and connect up the New HDD to a sata Port, Other than the one the Win 7 HDD was On.
(3) Download ALL divers as Outlined above)
(4) install win XP, and drivers.
(5) when done, re attach win 7 HDD.
(6) use the Hot Key to bring up a boot menu (ie F12 on my gigabyte MB, F11 on my Asrock MB). and select which HDD to boot to.
NOTE: set Bios Boot priority to the HDD with the most often used Operating System on it. If no Hot key, then when you want the other operating system, then just change the Boot priority in bios.