It's dual boot. Neither OS knows anything about the other. You have it configured so Win7 can access the filesystem that WinXP is installed on but all it sees is a collection of files, not an OS. WinXP isn't running in any way shape or form and the WinXP registry isn't accessed as Win7 doesn't even know it exists.
You can't run WinXP inside Win7 like that. With dual boot it's one or the other. If you never boot into WinXP again there is no risk.
Last edited by le Pingouin; 21st Mar 2014 at 17:06.
Reason: Additional info