Best practice is to runtime upgrade your environment to at least 4.0 SP1 Update 1 - or let's just say 4.0 SP3 ;-).
XP Mode should be no problem though .. and it is possible to run 32bit XP Mode under a 64 bit Win 7 .. while there is no reason to run a 64bit XPMode for only your NAV as NAV is 32 bit.
hope this is useful..