This could be the most destructive VIRUS ever?!?

It is normal for the "C" drive which is your entire Hard Drive, to have only Windows 7 on it. The only way you could install XP is by Deleting the Windows 7 system and then create and format new partitions. By dividing the HDD into separate partitions, you give yourself the option of having more than one Operating System on the computer. The XP setup disk has all of these tools available on it. Just follow and answer the choices it gives you.