Windows 7 has support for a Windows XP virtual machine which basically means you can run Windows XP within Windows 7. You will need a processor that supports virtualization though. If you have one, boot into the BIOS and turn on the feature for your processor. You should also have sufficient memory on your system for it to work well. Once you've made the change in the BIOS, boot into Windows and download the Windows XP virtual machine add on from Microsoft website and download it.

This mode lets you run Windows XP applications on Windows 7 and also a copy of Windows XP within it. For most practical purposes, it's better than running a dual-boot setup.