Yes. NTFS, the file system that Windows XP uses, has a maximum partition size of 16 TB.
You could format the hard drive
Providing the Mac is a recent model with an Intel processor you could make a Mac into a Windows only machine or you could partition the hard drive and have both Mac OS X and Windows as options.
The hard drive stores the Operating System. Like for example : Windows XP or Windows Vista or even Windows 7 without the hard drive your computer will not turn on.
No. There is no method by which you could map hard drive space to the memory address space in Windows XP (you can use RAM as storage, but not vice versa). Even if you could, the performance would be so slow as to be useless.
You cannot purchase hard drives with Windows pre-installed on it.
Windows XP has no bearing on the hard drive size beyond what is needed to store it. Thus a hard drive on which Windows XP is installed can be anywhere from 1.5 GB to 3 TB.
Yes you can have the Mac OS on one drive and Windows on another drive. Or you can partition a single hard drive and have both on the same drive.
You can certainly move Windows to an external hard drive but Windows will not boot directly from an external drive. If you are running Windows in Parallels (See links below) you can have Parallels installed on the Mac's drive and then have your Windows virtual machine on the external drive.
The most likely reason is that the drive was formatted with a Linux file system. Reformatting the drive to NTFS or FAT32 will make the drive usable in Windows. You could also install an ext4 driver in Windows to access the drive without reformatting it.
Whether or not the hard drive has Windows installed on it is irrelevant to the actual process of replacing the drive. if you want to preserve the current Windows installation, you'll need to use hard drive imaging software to copy the data from the old drive. Otherwise, you can simply replace the drive and reinstall Windows as you would normally.
During installation, Windows 7 will need about 16GB on a hard drive.
I'm not quite sure what you mean, so I'll give you both answers: "How do you use a hard drive for Mac and Windows on the same machine?" On a mac, insert a Windows install CD or DVD, and the computer will ask you if you want to set up windows to run alongside mac. In the process you will partition the hard drive, so you will kind of have a windows hard drive, and a mac hard drive, but on the same disk. "How do you remove a Mac hard drive and put it in a Windows machine?" I am not a technical expert, so you might want to look up "How to remove and install a hard drive". All I know is it probably won't fit, so you might need to buy a hard drive enclosure and run the drive from a USB port. Hope one of these helps! If not, please revise your question