Keep in mind that when I refer to "partitions" here, they may be partitions on one drive, for on more than one drive. To the OSes you're using, it doesn't much matter whether things are on one drive or many.
To dual-boot Windows XP with Windows XP, you should be able to set it up pretty easily, actually. First, you install (or have a preinstalled) XP system on one partition. Then, install XP again on another partition. Pay close attention to what you're doing while installing: the XP installer (depending on which version of the XP installer you use) should give you an option to set it up as a multiboot system.
Even if it doesn't, you should just be able to tell it to which partition you want it to install. Then, after installation is finished, edit the boot.ini script(s) to adjust to suit your needs.
To be really safe about it, you can check your motherboard's CMOS capabilities. If it allows you to specify which physical hard drive is the first boot device, you can simply install on one drive, then pull that drive out and install on the other, then make sure you've got both drives in. Then, if you are booting one and want to boot the other, you restart the computer and enter BIOS/CMOS settings to switch which disk is bootable this time. It's a little more of a pain in the butt, though it will be the most "safe" method available and easiest to recover.
Here's what I'd do: Have three partitions between whatever number of drives you're using (plus whatever addition partitions you need for your arrangement of data and so on: I always have at least a bootable partition and a separate data partition so that if I need to nuke and pave the OS I can do so without having to restore all data from backup). The extra partition should only need to be about one GB (actually, far less, but with each GB being so cheap these days, you might as well err on the side of caution and flexibility). Install XP on one partition. Install XP on another partition. Do a very minimal install of Linux on the third, 1GB partition.
With this Linux install, I'll recommend using GRUB as your bootloader since that's what I know best, though there's no real reason you can't use Lilo. While installing, it should make the system multi-boot (or give you options for doing so) automatically, because modern Linux installers are quite good at recognizing the presence of multiple OSes. After the install, edit the GRUB configuration file to put the booting options in the order you like. The first option will be the default, generally. You can set the amount of time before the menu times out during bootup and goes automatically to the default OS here, as well.
The GRUB configuration file will be located at /boot/grub/menu.lst in most Linux systems, though a couple of them (like Red Hat Linux) use /boot/grub/grub.conf instead. The configuration file should contain information about how to configure it; it does in every Linux distribution in which I've edited menu.lst or grub.conf, at least.
This gives you the added advantage of a third, bootable, console-based, system-recovery OS, in addition to providing what is probably the easiest method to ensure you get exactly what you want for booting options. It's far less likely to hose up your system than using XP's automated multiboot options, and easy to fix if you have to reinstall XP and screw up the multiboot, too (since an XP install almost always over-writes the MBR).
Good luck.
