Okay. Apologies if this sounds stupid, but I've made this mistake .... Precisely which disks are you trying to reorder?
Let's assume you have one hard drive and one CD drive. You should be selecting the CD as your primary drive. Boot up with the Win XP disk in place and instructions during the installation should guide you through creating a partition for XP, formatting that partition, installing the operating system, etc. You will need a boot manager at some point to access both Win 7 and Win XP, and I still recommend EasyBCD -- which you're going to have to download and install as a separate thing, since it isn't part of Windows.
Alternately, you may have two (or more) hard drives and a CD drive. Again, you select the CD as your primary. Boot up with the Win XP disk and as part of the installation you'll be asked where WIN XP should go. Pick a partition (or a disk) not being used by Win 7 and install there. Again, you're likely to find that Win 7 still seems the only operating system on your computer when you revert to normal operations -- Win Explorer ought to show you the partition where XP installed, and you can probably treat it as just another data drive, but you won't be able to boot it up until you install a boot manager.
Now you COULD get fancy and install XP on a second drive and then alter the BIOS so that second drive was treated as the primary, so that you routinely boot up in XP and ignore Win 7. I'm guessing that this is not your intent.