Why would you want to 'format the drive'? The 'drive' is the whole kit and caboodle, so of course you are not allowed to format a drive that is actually running the disc manager software at the time !!!
What you are thinking (I suppose) is that you want to reformat the
partition containing XP. That is a reasonable thing to do, (although you could just delete it instead), and could be done from disk management in Win 7 or 8.
You have a multi-boot setup of course, and since it boots Win 7 and Win 8, it must be a BCD table. You need to be careful to discover which partition that is actually on - in case it turns out to be on the XP partition.
If you just delete the XP partition you will still have a boot record entry for it in the BCD table which can be removed by running BCDEDIT. If you mess up the whole boot structure, you can repair it as long as you have a bootable install DVD of 7 or 8.
http://howto.cnet.com/8301-11310_39-57511894-285/how-to-dual-boot-windows-7-with-windows-8/ is just one of many, many guides to fiddling with boot records. It is not done lightly, be warned, although as you seem to have set it up, you may actually be more knowledgeable than appears at first sight of your post. You have to be clear in your mind about the meaning of 'drive' in any particular context. Normally, a drive is the physical hardware, and as your attachment shows, you have
one, and it is divided into
partitions, each one - confusingly - described as a 'logical drive'