I think that the problem...is the Win 7/Vista bootloader...still remains on your system.
These two O/Ses use a different bootloader than XP...which, when installed, supercede the XP bootloader and reflect XP as "an earlier version." So, your current bootscreen options reflect the Win 7/Vista bootloader, not the XP boot.ini file.
To remove it (after I had installed the Win 7 beta and removed it earlier this year), I used Easy BCD from within XP.http://www.windowsreference.com/windows-vi...-windows-vista/
If that doesn't do the trick, I'm pretty sure someone in the Vista or Win 7 forum will have an easy way to do it.