I currently have two hard drives on my computer. One ("C" Drive) has XP and the second ("E" Drive) has XP also from an older machine with important files I saved. And ("D" Drive) is my CD drive.
I transferred all the files from "E" to the "C" drive. Now I want to make the "E" Drive for Linux only. How do I set up my system to know which O/S I want to start with? And how would I load Linux on "E" drive only?
Any help will do. Or else I will have to use two different computers.

There are many threads on LQ about this, so you'd be wise to do a search and read through some of them for more detailed information.

Basically, when you go through the installation, you should be able to choose which drive to install on. Note that the drives won't be referred to as "C" and "E", as those are Windows terms, they will be named something like /dev/hda and /dev/hdb (and a number following the hda or hdb is a partition number on that drive). You will need to reformat your "E" partition(s) if they haven't been deleted already, as Linux will use a different file system. Again, the installation should let you do this.

As for dual booting, the installation might detect that Windows is there and ask you if you want to add it to the bootloader menu. If not, you'll be able to do that manually afterwards and there are examples on LQ and elsewhere to help you with this.