does Win7 call on the XP OS to track down the dlls via the registry and so on?
Absolutely not.
If - as you claim - all these applications installed under XP still work under 7, why do you need to run XP at all (in the sense of being able to boot into it)?
Why do you need to even contemplate running XP "in a VM"?
There is zero threat if you have old XP executable, system files etc. hanging around wasting disk space if you don't boot into it.
Easiest way to see if all your old gubbins still work is to rename the XP Windows directory to something else - from within Win 7, obviously. If everything works, then the applications don't need anything in the Windows directory and you can just delete it, lock stock and barrel.
SD