Yes you can. Im using that exact configuration. TBH you can have as many OS's on as many Partitions as you want.
I installed XP on one drive, then installed Windows 7 on another drive. Now when I boot, after POST, I get an option to "load older Operating System" or "Load Windows 7"
Most motherboards BIOS's have the option to select the primary boot device, so you can boot to any drive you want.
I have an 80Gb drive with XP on it, and when I load XP this drive is the C:
I have a 750Gb drive with Windows 7 on it and when I load 7 THIS drive appears as C: and the 80Gb appears as D:
And vice versa
i dont see a point in doing this to be honnest, just a big waste of time because people dont want to improvise, get updated software and different software etc
If you *have* to do this, use the boot manager microsoft automatically sets up for you so you DONT have to enter the bios every time check google for details "dual boot xp windows 7" or "dual boot xp vista" (since its exactly the same, funny that)