Since you do not have an identical PC that has a working image, I assume that this is the compatability problem introduced into the OS.
I have been told that this incompatability was deliberatly written in by some Microsoft employees.
There is some debate going on in our organization about this "opportunity".
As you know from your experience, people will pay to avoid this problem, and the tremendous amount of lost time it causes.
The question is how much, how hard is it to fix, and how longtill Microsoft "recognises" the error in the memory manager and patches it.
The other problem is that we are extreemly busy, and have no free time, only money, but that does not help. It is free time that is necessary.
I would suggest, as a workaround, setting up a Win98SE PC to run these 16 bit applications.
Hardware is cheap, and, if the workstation/area is short on space, install a KVM switch.
Regards, Chris