I may be looking at this too simplistically, but why not take out both the drives, put back your original as the master, boot from the XP CD and repair the Windows XP installation on your original disc. Then you should be able to add the new second disk as a slave, format it and do what you like with it.
The complication comes when you decide to change around the disks so your new one is the master. Then you will be faced with reinstalling your progs, but the data should still be on the original disk and accessible when you make it the slave.
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Regards
Mouse
(Occasional crooner and all round friendly Scottish rodent)
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