Trust me...
Always, unswervingly, but.... I just had to set up a trial and here's what I did. All install disks are genuine originals or slipstreamed versions produced from genuine versions.
1. Partitioned a hdd and formatted partition D: and installed using Win XP Home SP.1 - reboot.
2. From Cmd.exe formatted partition C:. Installed Windows XP Home SP.3 on partition C:.
Noted that Setup referred to D: as being C:. Reboot.
3. NTLDR displayed the multi-boot partition info from Boot.ini with the default being XP Home SP.3 - as expected, the last system installed.
At this point the system is setup similar to the OP's apart from the OP having Vista on partition C:
4. Booted to XP Home SP.1 located on D: and formatted partition C:
5. Rebooted and installed Win XP Pro SP.3 on partition C:
6. On reboot NTLDR displayed the multi-boot partition info from Boot.ini with XP Pro as default as expected. Partition(1) is shown as containing XP SP.1 with XP Pro on partition(2), the reverse of what was expected but not a problem.
My conclusion: Setup will automatically create a multi-boot environment. Apart from the slight confusion with drive letter and partition number allocations when booting into the system on C: the method is viable. After deleting Boot.ini the advisory message showed that the system would be booted to C:\Windows but booted to Win XP SP.1 which theoretically is installed in partition D: