Hello shannkarmotwani,
Windows XP mode only works on Windows 7 version Professional, Ultimate or Enterprise. If you are running Windows 7 Home Premium you will need to search for 3rd party virtual software.
You can try programs such as VirtualBox (www.virtualbox.org) or VMware Player (www.vmware.com) and install a separate copy of Windows XP (either Home Edition or Professional) for that
purpose. You can find virtualization software free of charge that will run on Windows 7 Home Premium.
Hope this helps.
Sincerely,
Marilyn
Microsoft Answers Support Engineer
Visit our Microsoft Answers Feedback Forum and let us know what you think