My computer has Windows 7 pre-installed and it comes with 3 normal partitions plus a Recovery Partition and a "System Reserved" partition. I want to delete Windows 7 and install Windows XP but I don't know how to deal with this "System Reserved" partition (which is assigned with drive letter "C") and it seems to be dangerous to remove it. So what should I do?
Your best approach would be to delete the Windows 7 partition, and the System Reserved partition.
Then create one primary partition big enough for XP - say 40GB or so, and leave the remaining space unpartitioned.
Then later if you want to run W7 or other OSes, you can create an extended partition with the remaining space and create as many logical partitions as you need later.