Allow me to clarify...
One can change the OS in their computer from XP to Windows 7 and (may) call it or refer to it as 'upgrade' BUT, unlike going from Vista to Windows 7 which, can be done as an actual "Upgrade (path) Install", XP cannot be done that way; there is, in fact, no upgrade path, per se, from XP to 7. Ergo, in this person's scenario, since a clean, fresh, "Custom Install" is required, anyway, there is no point to installing XP (again, 1st) only to have it wiped out/off when moving to 7. When XP is on a machine already, sure but, now, putting XP back in 1st serves no purpose. Just put 7 in @ the onset, using its Key & if necessary, when Activating, phone in, explain & maybe will be necessary to give MS the (old) XP Key, as well.
I trust this makes more sense out of what I had said, initially.
Cheers,
Drew