There are two possibilities: you can run xp mode, which is a virtual machine for Win7 with a pre-installed and fully licensed XP, or use the aforementioned Virtual PC.
XP mode can only run XP, while you can install any OS you like in Virtual PC, even Linux - but also XP. You will then need a licenses XP though, for the installation in the latter.
Link to XP Mode free download:
http://windows.microsoft.com/en-US/w...e-in-windows-7