@blackiam
You said your laptop came preinstalled with XP, therefore, you would need to purchase a license in order to activate Win7 on it. That license will come with a key that you need to enter manually to activate Win7.
This thread shows different ways to activate Win7: http://www.wikihow.com/Activate-Windows-7
Good Luck
I am a volunteer and I do not work for, nor represent, HP