As far as I know, to dual boot those drives, you have to install the oldest OS first and then the newest.
To make things easier on you, you may want to just disconnect the c drive that has XP installed on it and connect the d drive as the primary drive, install Win 2K to it and then set the "old" c drive with XP on it as the slave d drive. I personally haven't tried it that way (can't remember at the moment).
The boot loader
should see the new OS (XP) and add it to it, if not you may have to edit the boot loader.
I suggest doing it that way only to protect your data on the XP drive. Also, when you go to install 2K and the drive isn't formatted as FAT32 or NTFS, you'll be prompted at the installation (I would choose NTFS).
All that without using PM7

.
Mike