Ok assuming that you have 2000 on your 40 gig C drive and you want XP on your 120 gig D drive its quite straight forward.
Have you anything on your 120 gig drive that you want to keep ?
If YES then transfer it to your C drive, if you have enough room or to CD/DVD.
If NO then all you have to do is set the bios to boot from the CD as its first boot device, put the XP CD in the drive and reboot.
It will ask where you want to install XP and should say that you already have 2000 on C.
Using the up and down arrows on the keyboard select the D drive.
You have to press F8 to accept the agreement and its a good idea to decide at this point if you want to use all of the 120 gig for XP or if you want to partition it.
Personally I would create a 40 gig partition and install XP on that so you can use the remaining 80 gig as storage, in case you have a problem with the XP OS at some point and need to reisntall XP, that way youre data on the 80 gig wil be safe.
If you dont want to create a partion just select the install XP option, it wil ask you to format as NTFS full or quick, quick is fine.
If you want a 40 gig partition then select the Delete partition option (I think its D), confirm that its definately the 120 gig drive that you are going to delete, then the next window will ask you to confirm by pressing L.
The 120 gig drive will now show as unpartitioned space.
Highlight it and press C to create a partition.
Select the size in MBs in the box that you require, I recommend 40000MBs, this wil give you just inder 40 gig.
Then select the install XP to that partition and the NTFS quick format option as mentioned earlier.
Just follow the steps that come up on the screen entering the information or saying next where appropriate.
Once the installation has been completed set the bios to boot from the hard drive as its first device and when you restart it should ask you which OS you want to boot from as XP wil have modified the boot.ini of the C drive to show both OS options at start up.
Use the up and down arrows to select which OS you want to boot off and press enter.
Once you are up and running in either version of windows dont forget to go into Admin Tools/Computer Management/Disk Management and right click on the remainder of the 120 gig partition, assuming you created a 40 gig for XP, to allocate and format teh partition to make it useable.
I hope that this is easy enough to understand and that, as I have done this from memory, I hope I have the sequence of events correct.
As I said its quite straightforward but ask if you dont understand anything or if I have misunderstood your setup or intentions