Yes, you could shrink your Windows partition and install another OS on a new partition. IF you want another boot loader, GRUB will load XP, Unix, Linux, or Windows 7. Or, the windows boot loader will allow you to select which OS to boot.
just a side not I have seen laptops that don't have windows XP drivers, because they ship with 7 and there's no reason to run XP or waste time on drivers for a dead OS. So you may need to check if you intend to run windows XP.