Reinstall XP in Windows 7

You don't need to format your current install, in order to install XP. You can setup what is called a dual boot option. You'll want to follow method 2, in this guide.
http://www.sevenforums.com/tutorials/8057-dual-boot-ins...

If you just want to wipe out windows 7, then you need to boot off of your XP disc, and format the current install. You can't do it from within windows. You can do this by either changing the boot order in the BIOS, or selecting the CD/DVD drive from the boot menu on startup.

i agree with aford the dual boot is the best option .you will want win 7 at some point!

It's still a virtual environment. It requires a CPU with VT. It was designed mainly for business uses. There is a nice pro and con article here.
http://www.windows7update.com/Pros-and-cons-of-xp-mode-...

Dual boot is an option. But again, I want xp on a computer that has 7 on it now. I have a billing program for my business that is not yet supported under windows 7. Is even possible? I'm having trouble finding drivers to supoort xp on 7 box. thanks

Yes, it's possible. As mentioned above, check out this guide. You would want method 2.
http://www.sevenforums.com/tutorials/8057-dual-boot-ins...

As far as the drivers go, we would need the model of your computer to help with that.