What you need is Virtual PC. Microsoft provide license free virtual hard disk images that allow you to test the different versions of Internet Explorer on the same machine.
Just download
Virtual PC for free from microsoft.
You can then download the different virtual disk images for each combination of OS and browser.
IE6-XPSP3.exe contains a Windows XP SP3 with IE6 VHD file
IE7-XPSP2.exe contains a Windows XP SP2 with IE7 VHD file
IE8RC1-XPSP3.exe contains a Windows XP SP3 with IE8 RC1 VHD file
IE7-VIS1.exe+IE7-VIS2.rar+IE7-VIS3.rar contain a Vista Image with IE7 VHD file.
They can all be downloaded from
this page on microsoft.com.
It makes testing so much easier and has none of the problems that can be caused by the other methods.