Adding a partition

mjf said:

May still be a long shot but....

W7x32 supports the 16 bit subsystem while W7x64 does not.
I believe the same constraint applies to native XP.
Therefore I suspect W7x64 running xp mode won't support a program requiring the 16 bit subsystem while W7x32 running xp mode would support the 16 bit subsystem.

I think you have cracked it, many thanks.

CyberZeus said:

As far as I know, Windows XP Mode is always a 32bit XP Professional both in W7x64 and W7x32...

I think the 16 bit subsystem is part of the the underlying OS that the XP mode emulation is running on. I stand to be corrected on this one though.

CyberZeus said:

mjf said:

CyberZeus said:

As far as I know, Windows XP Mode is always a 32bit XP Professional both in W7x64 and W7x32...

I think the 16 bit subsystem is part of the the underlying OS that the XP mode emulation is running on. I stand to be corrected on this one though.

XP mode is a Windows XP Professional 32-bit. So, XP mode owns its 16 bit subsystem.
Using Windows Virtual PC to run 16-bit applications on 64-bit Windows - Virtual PC Guy's Blog - Site Home - MSDN Blogs

This doesn't prove to me that XP mode under Windows x64 owns its 16 bit subsystem. It says you can get success with some 16 bit apps by running virtual PC.
Likewise VMware can be successful with some 16 bit apps- see here
Is Windows 7 able to run 16 bit installers under XP mode? - Microsoft Answers
So it suggests to me that it is Virtual PC or VMware that is providing the subsystem capability.

XP mode alone under Wx64 won't run many peoples 16 bit apps whereas Wx32 will. The OP himself has this experience as do others.

So OP you may want to try Virtual PC or VMware.
I'm reporting what I read, Virtualization experts (and I'm not one of them) may want to chip in.

Unless the software is not supported anymore upgrading avoids these problems and is bound to give you better performance.