So is WinXP installed on C: and Win7 on D:? If so then you haven't really got much of an option except to reinstall as removing the current C: drive will result in a non boot and even if you do a repair and get Win7 to boot it'll still reference the drive as D:
What I would do is backup any required data of the Win7 disk, then unplug the WinXP disk and do a clean install. After the install has finished plug the WinXP drive back in, you may have to do a 'take owership' of files/folders to see some of the contents and then start restoring your backed up data.