File is not compatible with the version of Windows you're running

Solution 1:

You say it is a really old installer, is it a 16-bit application? All 16-bit application support was dropped from Windows 7 x64 - It will not run, at all. You will need to use an emulator or move back to 32-bit Windows. XP mode in Windows 7 might be an easy solution to get this application up and running seamlessly.

Solution 2:

With legacy installers you really just have to fiddle around with the settings. Try setting compatibility mode to Windows XP SP 3 and Set run as administrator.

Some legacy installers can be "unzipped". Meaning some zip utilities can actually unzip the files the program is supposed to install. Now I don't recommend it, but you could try to manually move the files yourself.

Solution 3:

If running the installer in compatibility mode with UAC turned off (registry change) doesn't work, the next step is to try a manual install. This is where you use file comparison techniques to find what the installer actually does to your computer and mirroring that to your windows 7 machine. If you've never done this before, I wouldn't recommend it because you can run into a lot of problems trying to get everything working. Which I know from experience is a real pain to get everything.

The better option is to download and enable XP mode in windows 7 (doesn't work with win 7 home or starter). This would at least give you desktop shortcuts that launch the VM on demand. You can find it here.