I would be installing Win XP 32 Bit SP3 on the second partition with Win 7 on the 3rd partition.
The 1st partition is the 100MB system partition that the Win 7 installation creates.
The first issue I see right away is that the Win 7 boot entry gets overwritten by the less mature Win XP boot loader - so how do I make a system that will allow me to dual boot into both given this scenario?
Also - would the 100MB system partition that the Win 7 installation created be a problem for XP ( it might want to be on the first partition? )