First of all you need to decide how you want to partition your hdd, I will suggest you to have it like this:
1. Two Partitions of at least 80 GB, for each of your OS (i.e. XP and Win7)
2. You can either keep the remaining space in one partition or divide it into 2 or more according to your needs.
You can create partitions or delete partitions during windows setup process (either XP or Win7).
And about installing OS's:
1. Install Windows XP first, and remember Windows XP does not have native SATA support. So ideally you should enable 'IDE Emulation' for SATA in your system's BIOS.
2. Once XP is successfully installed, you can then proceed to install Windows 7.
Its your decision whether you want to put XP or Win 7 on your first partition; usually i put my primary OS on C:.
Now drivers, I think it really doesn't matter in what order you install them, however, starting from motherboard/chipset drivers, then display/sound is how i normally do it. Once that process is completed straightaway put an good AV and Firewall solution on your system before you install any other software.