good luck. Normally you install XP first and then 7 so that the controller and partition are setup correctly for XP. Working backwards you may just end up reformatting.
If you were wanting to run a virtual pc then you will need an aftermarket program as I dont think the HOME version comes with it.
You would have to shrink the volume using something like Gparted, although it is not recommended because you still may lose everything because of how the boot tables are configured in Windows 7. Why would you want Windows XP on a Windows 7 computer anyway? Kind of a waste if you ask me, mostly all Windows XP applications run under Windows 7 x64, and the few that don't i run a VM.