Psyhoticboy, please do not double post.
Posting in one thread keeps the conversation flow better and avoids misunderstandings and double postings.
The first answer is that YES you can use both HDDs in your pc. You dont' have to copy anything over to the new hdd - that's your choice. If both HDDs have XP installed on it, i would use the larger one as the master on IDE channel 1 and the old one as a slave drive on IDE channel 2. However, it's such a small drive (6 GB) that I hardly see a need for it with a new drive that is 120 GB. As mentioned, make sure you have the correct jumper setting - it will be noted on the HDD itself on how to set it properly.
You will need to format the new HDD if you haven't done so already. Any HDD needs to be formatted in order to hold data - that's the whole purpose of formatting the drive.
Re-reading your post again, you say you have XP installed on both HDDs. If that's the case, that 6 gigger is already formatted. so why are you asking if yoiu need to "format it"??