Yes, you can. But it's easy to do it wrong and tell the installer to format the disk. So it makes a lot of sense to make a backup of that backup drive on an external hard disk.
One small point about SATA: the easy way to install of a SATA drive is to use an SP2 or SP3 install disk.
Kees
my primary hard drive (WD 250gb SATA3) seems to be failing. (intermittently is seen/not seen by bios; missing system files; etc.) My backup drive (WD 500gb) has tons of space. Can I reinstall Windows XP on the backup drive and make that the primary without losing all the data I have stored there?

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