This will wipe your Windows 7 completely so make sure you backup everything you are going to want to keep. Put the disk in and boot to to your CD/DVDrom. It will ask you where you want to install it to, and you will see your Windows 7 drive. You have to format that first and install it to there. There will be an option there, I cant remember exactly what the XP install looks like but Im sure you will work through it easy as.
Let me know if you need more info