|For files storage, just plugging a new drive in and partitioning and formatting it from Disk Manager is all you need.|
If the drive already has an OS on it, but it was installed on another system, you CANNOT do this (it will not work). The operating system MUST be installed while the drive is installed on THAT exact computer.
To run two operating systems on two hard drives on the same system, you start with the older OS (in this case your installed Windows XP), plug in the new drive, Delete all partitions in Disk Manager and reboot the system to the newer OS install disk (Windows 7), select Custom so you can choose the disk to install Windows 7 on (go by the disk capacity to verify the correct drive) and choose the dual operating system option.
If Windows 7 was already installed on the drive AND it was connected to the EXACT computer but the XP hard drive was unplugged at the time, you can then select the OS you want to run by setting up both as bootable in your BIOS, selecting one as the default (first in boot order) and using F8 when booting to select the alternate drive to boot to. OR you can run msconfig within Windows 7 and add Windows XP to your boot options and Windows would give you the choice at boot up.
You have to be a little bit crazy to keep you from going insane.