No, you cannot have both versions of Windows Internet Explorer installed at the same time. You can, however, install Virtual PC and install another copy (you would need a second license) of Windows XP.
Matt nailed it right on the head, also worth pointing out that if you somehow were able to get it to work, it's illegal to have both within the same Operating System. The only legal way to do it, is to have it within a Virtual Environment with a second license.
there is no cost "right now" if you wanted to run it in a virtual machine. Microsoft released a Virtual PC image with XP SP2 and IE6 - so, you would install IE7 on your main machine and run IE6 in the Virtual PC image. specifically for developers that wanted both versions to test.. I