System settings droping out on reseting computer

What version of Sophos are you attempting to run that would use 16bit or Dos?

When you say you are trying to run Sophos updates the updates should be run from the following directory.
C:\Program Files\Sophos SWEEP for NT

what you do is:

1 - Install sophos Antivirus selecting the local install option in your case.

2 - If you need to install any updates go to http://www.sophos.com/downloads/ide
Select your version of the Software and then e.g version 3.85 and download the latest IDE's. These can be in either zip or exe format.

3 - If you chose to download the the Zip files save the files on to C:\Program Files\Sophos SWEEP for NT and unzip them > Then reboot the PC in order that the new IDE's will be recognised.

4 - If you chose the .exe download you need to place the .exe file in the C:\Program Files\Sophos SWEEP for NT folder and double click. When you see the DOS window click the letter "A" on the keyboard to overwrite all old files.

I may be off track here but it looks to me as if you are trying to run the exe file you have downloaded from the C:\WINDOWS\SYSTEM32\ folder.

Either way try dowloading the zip files and placing them in the C:\Program Files\Sophos SWEEP for NT folder.....rather than using the .exe (Dos) files.