2 TB My Book works on Windows 7 but cannot reformat to work on Windows XP?

Hello,

If you have the 32bits Windows XP you will need be able to use GPT drives.

Check this link for more info.

http://msdn.microsoft.com/en-us/library/windows/hardware/dn640535(v=vs.85).aspx#gpt_faq_xp32_boot

To use this drive in your Windows XP computer I recommend you format it as MBR and not GPT