Dual boot probs: XP & 2k3

Source (remastered)

The boot partition in M$-speak is where the OS resides ie. winnt/windows folder.
The system partition is where the master boot record points to and contains ntdetect, ntldr and boot.ini.
In M$DOS days it was exactly the opposite. Boot files where the boot partition and where the OS was, was called system partition.

Windows 2003 in D: and reinstallation of Windows XP on C: instead of an installed Windows 2003
XP has since been running flawlessly, though win 2003 on D: will not boot any longer, that is, i see the dual boot screen, but if i go for win 2003, it will try to boot up, but at the precise moment when the moving win2003 logo (that moving bar from left to right) should show up, the PC reboots, leaving me no option other than boot in win XP.

All the important boot files from D: win2003 are on C:, so when you redid it, you killed them and that's why 2003 on D: no longer boots. You can likely fix this by doing a "Repair" of Win2003.
So when you formatted you erased the boot related files of Win2003. Now XP was the lone owner of the pc world.
To get the 2003 master boot record back you run the 2003 recovery console command FIXMBR.

To fix the 2003 versions of ntldr and ntdetect of win2003 on C: (over winXP)
Start the Win2003 installCD and when give the choice between new or repair, you will choose repair.

After this you should be able to multiboot both OS's. If there is a issue it will be with the boot.ini.
Either use the recovery console Bootcfg utility to autocorrect the boot.ini or manuall edit it:
Add the following line to c:\boot.ini of winXP and try to boot in Windows 2003:

multi(0)disk(0)rdisk(0)partition(2)\WINDOWS="Microsoft Windows 2003 Server" /fastdetect

It assumes that win2k3 is installed on Partition 2 on your first harddrive.
If it doesn't work restart the windows 2003 installation CD, after first reboot remove the Windows 2003 Disk & edit boot.ini & add the above line.