xp being on a logical is not a good choice , system means nothing except that it is the one that boots and is a primary partition like wrote danielsangeo
you can create 3 primary partitions and one logical per drive , the logical partition can be having 1 or 2 or more sub-partitions while primary can not .
if i were you , i would buy an intel ssd of 120 or 180 Go . then do some backup and reinstall all . xp and after win7 , with changing the boot drive [ i mean if you have the ssd , when you install xp you select the old drive to boot in bios ; when you install w7 then you select the ssd ; so your father will continue like it always was [when bios is having boot on the old hd]and will be able to test your ssd with win7
windows 7 and 8 have a multi partitions system so it is better to let them have a whole drive .
another solution for you could be to install win7 in a vhd file , that will be seen like a hard drive .
https://technet.microsoft.com/en-us/windows/windows-7-vhd-boot-demonstration.aspx
https://www.msfn.org/board/topic/129475-boot-windows-7-from-vhd-an-amazing-concept/
i have one like that that i shrinked to below 12 Go , with grub4dos , i upload it in ram ;’] of a 16 Go pc
that is quite cool and stable , pc is a file server