Sounds like you have 3 basic problems: 1) You want to run and use your XP partition, while you are preparing windows 7 to run all your software. 2) You want to install your ``tons of'' software, from XP, on windows 7 along with, I suspect, various shortcuts, batch files, menus, settings that you created in XP. 3) I suspect you want to backup your XP AND windows 7 partitions, in case anything goes wrong.
So - start with 3 - make an image backup of XP, and put it on some external or internal backup drive. Macrium Reflect or Paragon Backup both provide free image software for this. I highly recommend you also create bootable CD that allows you to run partitioning and/or backup software, and to access your partitions. Again, Macrium or paragon provide such CDs. They either use the win PE or a linux OS to accomplish this. By the way - paragon also sells ``adaptive restore'' software that allow you to install an old windows OS on a newer PC.
Then do 1) I suspect your disk has just one C: partition. Use a partition tool, such as Easeus partition Master (its free), to resize C:,create and format a second partition on your disk, and make the new partition active. By the way, this tool will also let you hide or change the drive letters of partitions, other than the bootable C: drive.
Now install windows 7 on the new partition, which it will see as C: Then, I recommend doing an image backup of win 7. It will be invaluable to cleanly recover from any serious future OS trouble.
Your windows 7 boot menu, should now allow you to boot to either 7 or XP. Whichever one you choose, will become drive c: for that session. If there are any problems, use a free tool such as Easy BCD (http://neosmart.net/dl.php?id=1
) to edit the boot menu, as needed. Once setup, dual booting is quite painless.
Now you can do 2) the painful, way: Boot into 7 and slowly install all the tons of applications, shorcuts, etc. from XP to 7. I always keep all my setup files for this purpose, and there are tools that save installation info. for groups of applications, so future installs will be less painful.
If you want, you can try the shorter upgrade path from XP to vista to 7 -- on the XP partition. If it works, you simply use a partition manager to switch the former XP drive to be the active one.
If anything goes wrong, you are covered: You have a clean backup of win 7, and one of XP. And if your PC does not boot, you can boot from a CD and restore either backup, set one of the partitions as active, etc.