I've got XP on the first hard disk and Vista and Linux Ubuntu on separate partitions on the second hard disk.
I use the same folder for My docs in XP and Docs in Vista, by just changing the target for each to the same location.
There is no problem reading files in either MS OS, although caution should be shown as it is possible to interfere with system files in the OS that is not running and potentially stuffing it.
As previously mentioned, all apps have to be installed on each individual OS, as do all drivers.
They are two separate entities except when it comes to booting, but Vista does have a boot repair utility on the installation disk.
Also, once you have installed Vista, modifying the Vista Boot Loader can be a little more difficult than it is in XP, but a handy little app called
EasyBCD makes that very easy.
Edit: That is something I have not tried Gizmocat, I must do so now.