1) yes that will work, but you need to set the Manual Jumper on the Back of the HDD correctly... if you dont have any other OS's installed, it will auto detect, and you wouldnt need to do what jeremy said.
If your putting the OS HDD into a slave position just set the Jumper on the back onto the pins 'SL', look at the top of the HDD it shows you instructions. (at least all modern HDD's do)
2) why do you wont your XP HDD as a slave?