I can't answer your question about SCSI because I have no knowledge of that. I will let others address that issue.
But about reinstalling XP. First of all, no problems with XP updates, they will still be available from Microsoft for a few years to come. SP3 is the latest and last major update to XP and that will incorporate all updates up to and including SP3. Then the updates after SP3 will be offered once SP3 is installed.
But that, "reinstalling XP" may cause you a problem.
Are you aware that, if you install/reinstall XP now, "after" Win 7 is installed, you will lose access to Win 7?
I don't know how you set up this dual-boot XP and Win 7, but the rule is, install the older OS first, then install the newer OS. That is because the newer OS replaces the boot information on the partition where the older OS resides, allowing both OSes to be loaded. Win 7 uses BCD, (Boot Configuration Data), to boot up, but XP uses boot.ini. If you reinstall XP, then the BCD will be removed and replaced by boot.ini and so Win 7 will not boot. Getting that back can be difficult, if not impossible.
You will want to consider that before thinking of reinstalling XP.
Mark
My system dual-boots between XP and Win7 because I have some legacy devices that I still use that won't work in WIn7. To dual-boot, I use the no-frills boot manager that came with Win7. One of the devices I use in XP is a SCSI scanner, and last time I checked, I could not locate SCSI drivers for my SCSI card with Win7, and M$ has made it pretty clear they aren't supporting SCSI anymore.
Unfortunately, my motherboard has one fewer PCI slots than I need, so what I have to do is unplug a firewire card and plug in the SCSI card when I want to boot the SCSI scanner. Now, in the past, there wasn't a problem doing this, but I tried it just now, and the system resets itself prior to loading the OS. So I've tried booting it to a last known good config with the SCSI card in place and it still resets. Then I tried loading it to safe mode, then rebooting, and still it didn't do any good.
So I pulled the SCSI card and re-installed the firewire card and turned the computer back on, and it started doing the same thing -- resetting itself before the OS booted up. So this time I elected to load the OS in Safe Mode, and choose a different last known good config. And that finally worked. I have XP back, but with my firewire card, and not the SCSI one. Hrm . . . maybe I should try choosing a set point from Safe Mode with the SCSI card installed.
Now, even though I didn't have to do this before, I'm wondering if I should disable the firewire card before removing it from the system so that when I restart the system it doesn't look for the firewire card. Think this might be the best way to proceed?
Also, one other thing I feel I should mention because it might be related somehow: after my system's most recent round of automatic updates for Win7, it did the same thing when I tried loading XP -- the system reset before XP loaded, but this problem disappeared and didn't come back after I chose the "last known good" setting again. Still, I mention this because this is a problem I never had until this last set of Win7 updates. Although I don't really see how there could be a relationship.
I have a peripherally related question as well. I can see the day come when I may just throw my hands up and say to heck with it, wipe the drive and reinstall XP. But that means I'll be reinstalling the copy I bought several years ago. And I guess I'm somewhat concerned that all the updates that M$ has released for XP may not be available any longer. So what does one do in this sort of instance? Are there stable archives around for all the updates to XP that one can still count on for the foreseeable future? Hey, I like Win7 a lot, but XP still does me just fine and, on my system at least, is the more stable of the two operating systems.

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