I would like to install 2 completely independent instances of Windows XP (no data should be shared) in my computer within 2 different primary partitions. I know that grub can handle booting them correctly, but I have no idea if it's possible to install it and configure it within a 100% NTFS system and without any extra linux partition/distribution.
I am using grub4dos to dual boot XP and XP64. Both systems are on NTFS filesystems.
Setup was simple: I copied the grub4dos folder onto my NTFS file system. Renamed the windows boot loader "ntldr" out of the way and copied the grub4dos boot loader "grldr" to "ntldr". That way I am still using a microsoft standard MBR which makes my corporate required virus scanner happy.
This method also keeps my partitions independent. I can dump a partition off to an external drive and load a different operating system in it's place. I keep Vista32, XP32, Vista64 and XP64 images on my external drive. In about 1.5 hrs I can load any one of those images onto either of my two laptop partitions and be ready to go without fussing with boot configurations.
Edit: One more tip. When you do a windows install set the hidden bit on all partitions except the one on which you are installing windows. The window installer will replace the boot sequence on the bootable partition and you loose partition independence.
No, stable grub does not support booting from NTFS at the moment.
You would need a small FAT partition to use GRUB. Alternatively, consider using the native bootloader or another third-party loader.
That being said, support is being worked on for (currently alpha) grub2.
Grub would require a unix-like environment existing. You could use the standard windows boot.ini setup to have a dual booting Windows XP environment quite easily though.
You can dual boot using the standard windows bootloader.
Right-click on Computer, select Properties|Remote Settings|Advanced Select settings under startup and recovery, and select the your primary partition.
You may do that, in fact. Using a GNU/Linux liveCD/USB and a valid-format grub.cfg you may totally install Grub2 in a directory in one of your Windows partitions and boot both OSes(even if the system later contains no Unix system).
@MikeyB 's answer is no longer valid now, Grub2 is able to install on NTFS filesystem.