well in the small online community dedicated to preservation of legacy windows its been done. 95/98/ME with various workarounds to run on relatively modern hardware, but yeah there really isnt much point. Other than the proving it possible that community already done it would just be wasted effort, as graphics cards newer than x850 or geforce 6800 wouldnt have the right z-buffer for games, so you might as well just be running it in virtualbox (no 3d accelerator support for win9x in virtualbox)
Hence the need for physical systems, though the best solution is an old socket 462 board x850 AGP and modern 80+ efficient PSU.
WIth XP its not quite as difficult, and of course any XP compatible game will work fine with newer model graphics cards.
Its also ''new'' enough to be functionally usable (despite security holes) without a lot of hacks and hotfixes, for the most part.
Maybe the OP had a bad experience with vista and is incorrectly worried about a repeat experience with 7.
MAybe for whatever reason the OP doesn't have access to windows 7 and wants XP instead of 10. I could certainly understand that. Before windows 7 came out, XP was gold. fast, stable, and would run circles around vista on the same hardware, but in most cases now except for really old hardware that can't handle Aero, windows 7 is actually faster than XP.
Personally I prefer windows 7 and will probably be using it ""forever"" so I can't really advise you to upgrade without feeling like a hipocrite, but windows 7 is faster (and more secure but thats a whole other can of worms). and in most cases works out of the box on most modern hardware (up to AM3+ FX8350 trouble free) and also works with Ryzen 1800x-2700x with effort (not officially supported) )
I think you should upgrade to windows 7 to better support new hardware, but I understand where you're coming from and if I couldn't have windows 7 I'd take XP over 10 any day.