Alright. we have a Drive with Vista, and a drive with XP installed.
Since they both boot at the moment, it is quite apparent that XP was installed first, and Vista was installed second; otherwise, XP would have replaced the vista boot loader and only XP would boot. Additionally, since they are part of the same partition, the C: drive would be the active partition. Only explicit changes made in disk management or diskpart would swap their positions. However for the sake of argument let us explore all possibilities.
scenario one: Drive C: is system partition. Drive D: is second partition.
Windows Vista is on C:. Windows XP is on D:.
booting consists of loading the Vista Boot loader from C:, which allows the choice of XP or Vista.
How did it get in this scenario?
Windows XP was installed to D:\ first. this saved boot files to the root of the system drive, and wrote the MBR as well.
Installing Vista meant that these files were overwritten. However Vista detected the XP install and saved it's own boot loader files, not only to C:, but also to D:. Note that those boot loader files on D: are only required when selecting the XP partition.
Formatting C: Would render the drive unbootable, even to D:. However, that is not the scenario here. the scenario is formatting C: and then installing XP to that drive.
In this case, although the D:\ drive has some vista boot files (grldr or something), they are unreferenced- they were in fact only used when booting XP from the windows Vista Boot loader that was on C:. in the process of installing XP, the "new" install of XP on C: examines all drives in order to create a multiple boot system. In this case it detects XP on D: and adds appropriate entries to boot.ini on C:.
Booting to D: will remain successful since the boot.ini references the drive using ARC paths, and the ARC paths are used to access appropriate boot loaders on that drive; this is for compatibility reasons with previous NT versions; each NT partition has it's own copy of NTLDR. However since the boot.ini on drive D: does not contain multiple selections, it is skipped and the OS is loaded.
in the imagined scenario where C: and D: are somehow swapped and D: is really the system drive, this still means that XP was installed first to D: and Vista installed second; the only difference is that Vista is being booted from C: as well as D:.The same information applies- although there is more booting information stored on D:, the new XP install will overwrite the Vista MBR and write it's own, meaning these boot files (grldr, bootmgr) are unreferenced. (they are usually started by the boot loader. XP doesn't load them. Vista's Boot loader does).
So no matter what drawn up case you can make with specific configurations of system and secodary partitions with Vista and XP- the order of install will have to be XP first, Vista second. At the same time while wiping the Vista drive WILL render drive D: unbootable, the installation of another OS onto that drive will still recognize the installation and add it to it's own boot.ini.
The confusion here might have stemmed from the difference between the Vista/Win7 and XP boot loaders, which are really only understood at the surface. Sometimes, we forget also that there is a Master boot record that is executed first and foremost, and the code in this MBR can either be the XP version or the Vista version. the XP MBR will execute NTLDR from the system drive. the Vista MBR I believe executes the vista equivalent, grldr, from the system drive. (I also believe that this "grldr" file takes part when a secondary OS is selected.
My particular experience is with my triple-boot laptop, which has XP-32, XP-64, and Vista Ultimate x64. at boot, I can select either "Windows Vista" or "previous version of microsoft windows". the "previous" option displays the very same boot menu I got with XP x64 after install- a text-based display that allowed selection between XP32 and XP 64.
Therefore my conclusion was that the vista boot loader executes the XP boot loader. In this case for the 64-bit edition. the 64-bit editions boot menu listed both the 64-bit edition and the previously installed 32-bit edition, and therefore the selection was displayed.
following the logic presented by the opposition, I might assume that formatting my Vista partition would make both XP 64-bit and XP 32-bit unbootable. And, if I was to leave it blank, that would be the case. However the discussed circumstances here are wether it would work to do just that- and then install XP onto the drive that Vista previously occupied. XP will recognize the existing XP install on D:, and it will create a boot.ini entry to allow selection. (and if not, one can be made manually).