When you have two OS's, even on separate partitions, the boot files for both reside on the same partition which is why having two OS's on the same HD is less than ideal. Over the years, I have seen many setups:
Workable - 1st OS say Win9x on C:\Windows and 2nd OS on C:\WinNT. Not only did this eliminate the possibility of using NTFS but left both OS's exposed to failure. Little Johnny coming home from school to play his game could easily mess up Dad's system.
Better - Using a 3 party boot manager like Powerquest's Partition Magic, you would create two separate C:\ Partitions. Booting to one locked and hid the other meaning little Johnny couldn't mess with dad's stuff at all.
Workable - You put WinXP on C:\ and then add Win7 on D:\ at first glance your OS's are separate but no real protection is provided. Booting to XP, any virus or other problem can affect the D:\ partition.....corrupted boot files prevent access to both OS's.
Better - Use a 3rd party boot manager to hide and lock the 2nd OS from access while booted to the 1st. Or, put each OS on a separate HD, installing each while the other HD is unplugged. Switch between OS's via the BIOS boot priority.
At this point in time, it's the 1st time in 20 years I don't have multiple OS's installed. Win 7's "XP mode" has made it redundant for me.