windows 7 can't use Windows XP
drivers, only run windows XP
applications.
You simply cannot install XP drivers into Windows 7 any more then you can install Windows 98 Drivers into XP or XP drivers into Vista.
The architecture differences contribute to this. Windows 95 could use Windows 3.1 drivers for devices but frankly it impacted performance immensely. Windows 98 could use windows 95 drivers no problem- same with ME. But 95,98, and ME all used the same basic architecture (with 98 and ME also supporting the WDM). XP, being the next consumer-oriented OS, was based on the NT core which had NEVER been compatible kernel-wise with Windows 9x or 3.1 drivers. (of course with windows 2000 it supported the WDM as well so for certain devices windows 2000 and XP could use "windows 9x" drivers, but really the WDM model isn't for a specific platform by design).
Windows Vista Brought sweeping changes in both the Kernel and the User interface code, with huge portions of core code being re-oriented around the desktop window manager, (namely, GDI being essentially Deprecated by both GDI+ and Direct3d). Not to mention the changes around administrator rights and UAC. because of this any non-trivial XP driver will have problems with Vista. Cameras, Mass storage devices, and other things were mostly OK- but on the other hand the same devices that had problem free drivers on the disc had suitable drivers built into the OS to begin with.
"XP mode" is basically just a addition to the already existent compatibility options present with executables, since windows 3.1 (I speak not just of the user-changable compatibility options dialog, but also the seemingly invisible application compatibility database (apphacks) built right into the OS that changes core behavior right down to the way memory is allocated, all in the name of fixing programs that weren't written properly to begin with. Anyway- this "database" also has entries for changing the DLLs that are dynamically linked to the program.
How does that work? You ask? Well, Take the XP "Luna" theme. The entire interface was revamped.
However- MS was very dilligent. They knew from experience that people don't follow the rules. For example, instead of sending a button the WM_COLOR message to retrieve the Background colour- why not just use GetPixel on the button DC?
This silly method works fine with windows 3.1, windows 95,98... etc. But what about XP? Bam- the colour returned is some part of the gradient.
It was because MS knew that this sort of thing ran rampant that it decided that unless the program explicitly said otherwise- the executable loader would link the program to the older version of "comctl32.dll". The newer version contained the logic that used uxtheme.dll to draw the various theme elements- the older version was dumb as a doornail and drew everything the same way as windows 2000.
Thankfully, by using a manifest file (a special XML file) or embedding it into the executable resources, programs can be made to draw using XP styles. This worked well, because programmers too lazy to learn how to call functions properly in general were too lazy to wonder why their programs looked 5 years old; whereas more diligent programmers who read documentation would know about this new feature since it was discussed in a number of technical articles with the MSDN.
In the case of Windows 7 (if I may go back on-topic
) I would guess that one of the main "hacks" being performed is to link to the windows XP version of a number of libraries, one of which would be uxtheme.dll, giving it the luna look (yippee(?)). Although it may be that this functionality is provided by virtual PC and it's integration with windows itself to provide a consistent UI and might not even have anything at all to do with compatibility settings (aside from the "run in XP virtual machine") type of setting for the program.
In either case- the drivers, installed via this "XP mode" will only be available to programs that run in "XP mode", since it is within this rumoured virtual machine that they exist. In this manner it would be impossible to install, say, an older Sound card that for one reason or another didn't have Proper windows 7 compatible drivers. you could install the XP drivers via the virtual machine method, but the sound card would likely be invisible to any program that isn't run in compatibility mode.