|Oh, you are lucky indeed.|
I'd' say use VirtualBox from Sun or Vbox site or get VirtualPC from MS. It will run W7 within a program that is a software computer at the same time you are running xp.
Since you are just playing with it anyway. You don't even have to create a DVD from the ISO image. You can use the image to boot to the "Virtual Machine".
"Best Practices", Event viewer, host file, perfmon, antivirus, anti-spyware, Live CD's, backups, are in my top 10