Hi nathaniel, welcome to NST.
As you've found from experience, XP runs fine from a logical disk
as long as the boot files have a primary partition to go on.
In your case that was fine because they were already there from your pre-existing XP.
the IPL program in the MBR at the front of the HDD looks for the partition flagged as "active" and goes to
its bootsector to find the bootloader (NTLDR).
Only a primary partition can be marked as "active", hence the need to have at least one.
You need to keep NTLDR ntdetect.com and boot.ini from your original XP install, and you can edit boot.ini to remove the entry for the old XP so that the new one is booted without the need for a menu.
Have a read of the
wiki.