Quick answer.Yes.
Windows 7 instaation will automatically set up a dual boot. Bydefault, when you boot up, you will find that windows 7 calls itself "C" partition. This is a virtual situation for compatibility issues. Rebooting into XP, you will find that XP is still, in fact, on C.
You can copy and paste your private files , with ease across the two os'S
In the case of XP, your decision to not to use the easy transfer "thing" is wise - it will lead to many hiccups.
You do realise, probably, that you will have to reinstall your software.