In general, installing older versions of software can mess up already
installed newer versions. Although I know of no particular issues I would be
very surprised if you didn't have some sort of problem installing XP over
2007. What you need to do is remove 2007 from the computer, install XP, and
then install 2007 again - making sure you choose the option to keep the then
existing XP version.
Before starting make sure you have the installation media for the new
version that came with your computer. If you don't already have it the
supplier ought to be able to provide it - although some resist it strongly.
If you have problems I *think* you should be able to download the trial
version from Mirosoft and then use your product key when you install it
(assuming you have the product key!) - but do get confirmation of this
before relying on it.
I will confirm what Jay says - I run XP, 2003, and 2007 almost
interchangeably on this computer without any problems and have another
computer with 95, 2000, 2003, and 2007 all installed and running (well, to
tell the truth, I am not certain that 95 runs - I haven't used it recently
)