Hello.
64-bit Windows (any version from XP and up) doesn't support 16-bit applications. All is not lost however! You still have several options available:
Perform an Anytime Upgrade to Windows 7 Pro or Ultimate and use XP mode. (The home versions don't support XP mode.)
Install virtualizing software such as VirtualBox (http://www.virtualbox.org/) or Virtual PC (http://www.microsoft.com/windows/virtual-pc/support/virtual-pc-2007.aspx) and
run a retail version of XP in a virtual machine (requires a separate XP license).
Contact your system vendor and see if they'll send you the 32-bit version of Windows 7. (assuming you don't mind the 32-bit version; this would require a complete reinstall.)
Download and install DOSBox (http://www.dosbox.com/) and try running it in that. (This is a DOS 16/32-bit
emulator, not a virtual machine.)