When configuring a dual boot system (RedHat9 and XP) can the operating systems be on seperate hard drives?

Yes. That's how my system is currently set up.

Cool. Does it matter which hard drive Linux is on? Does Linux have to be on the first hard drive accessed by the BIOS?

No, it doesn't matter which hard drive Linux or XP is on.

The only thing that "matters" is where you put the bootloader. Many distros' installation programs will let you choose to either place the bootloader (usually GRUB these days, but some still use LILO) on the Master Boot Record (the first few sectors of the first master hard disk) or on your linux partition. Needless to say, put it on the MBR. While the other way is doable, it's a lot more complicated to get a dual boot system up and running that way, since by default the BIOS will check the MBR for a bootloader.