I’m afraid you will have to reformat your entire Hard Drive beforehand.
Windows 7 uses the GUID Partition Table by default wherein Windows XP only supports Master Boot Record. Therefor when you try to install Windows XP it can’t find a partition to install to.
If you decide to reformat I strongly suggest to install Windows XP first and then Windows 7 afterwards. Windows 7 supports dual boot out of the box and will add both systems to the boot menu wherein Windows XP would replace the boot loader [which means you would have to manually reinstall it and add both boot options].