So you want to dual boot?
Why not use windows7 and wipe the disk with xp on? You could use it for music/photos or anything you want.
Unplug the old drive
Install the new drive with windows7 on,
Reconnect the old one so windows7 assigns it as drive D: and then drag to the new drive what you want to keep.
Format old drive and use for storage.
You ideally want windows on the new/much faster drive, just for a better experience.
Yes, just pull the power conector out of the old one.
Fit new drive, install windows 7, install drivers.
Reconnect old one, it may or may not give you the choice of dual boot when you restart.
Load windows7 and you will see that the old drive will be D:
Load xp and new drive will be D:
Boot into windows7 and keep what you want from the old one/format it.
Yes, with the caveat that Windows Installer has to be able to see your old version of Windows.
If you remove your old drive, the installer will not see your old version of windows, and the key you have will not work.
Then you'll have to install 7 twice. Once with no key, then a 2nd time with your upgrade key. Both clean installs. The 2nd time the installer will detect a valid OS on the drive, and your upgrade key will work.
Windows 7 new installer needs to be able to see your old Windows install or else it will not allow your upgrade key to work.
So either you leave your old drive in, and Windows sees XP, or you do the following:
1. install 7 with no key.
2. install 7 again with your upgrade key.
The 2nd time the installer sees your first install, and your upgrade key will work. Because the installer checks for a previous install before giving you the option of formatting your drives/ partitions, you can safely use the installer to wipe out your first win7 install before installing it again.
The whole reason for needing to install twice is just so the 2nd time you have an OS on the disk for the installer to see. That's if you choose to remove the first disk.
If that's 64bit only, you need 64bit drivers for your hardware, you better get downloading