SUCCESS
I decided to try again with the XP after Windows 7 installation, so I:
put the XP CD in the Drive & restarted the PC & XP started loading files
Did a long format of the 50GB partition that I created a few days ago that my (previous) XP install failed on.
After XP loaded the files & restarted the PC I received the dreaded "Error Loading Operating System" error message.
I pulled out the XP CD & put the Windows 7 DVD back in the drive & restarted the PC & booted to the Win7 install.
Chose System Recovery/ Startup Repair


Hit Finish & the PC restarted
I had a boot screen w/ 2- Windows 7 entries & 1- "Earlier Version of Windows" entry, so I chose the latter (EVoW) & XP asked for the CD & then continued installing XP to completion


From XP using VistaBootPRO 3.3, I changed default OS & renamed one of the Windows 7 entries in the boot menu to "System" since that was the 200 MB system folder & wont boot anyway.
Now I can boot to XP or Windows 7 using the Boot Manager as usual.... totally happy this worked.
Both XP & Windows 7 will boot now & I didn't even have to mess w/ the XP boot.ini or any VBP diagnostice, etc.. it just worked (I dig it whan that happens).
Here is what is in the 3- root folders
System

Windows 7

XP