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If you install Windows 7, it'll completely wipe out your xp so there's really nothing you can do except back up important documents like music, videos, and other files. Make sure the disc is in the drive, restart the computer. The computer should read the disc and ask "press any key to boot from cd or dvd" press enter. It should load the Windows 7 Setup. It's pretty straight forward from there. When you get to the formatting part, delete all the partitions then create a new one and leave the number how it is. It should create two partitions, one for system files and the other one where you will install Windows 7.