Yes. You'll want to install Fusion only after you've finished doing a successful Leopard upgrade (actually, I would recommend doing an Archive & Install) and determined that the machine is operating normally. Once that's done, Fusion should be installed next so that you can create a virtual machine to install XP on.
here is how I did it
1) Leopard
2) XP -via bootcamp
3) VMware Fusion
it does not really matter in which order you do it, but leopard needs to go first if you are going to do an erase and install
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