Windows XP 16 bit MS-DOS error and other issues?

Now when I first built this computer about 3 yeas ago Windows XP worked perfectly. Since then I've had Windows Vista and now Windows 7. However, this game I have works better in XP cuz the requirements are lower for XP. I'm getting this error message with the command prompt, drives open in seperate windows, I can't display hidden folders. It is rather annoying. I've tried multiple installations and versions (PRO, MCE) and I get the same issues. Has anyone discovered what this may be caused by and if it can be fixed. This happened on my friends computer as well, then I was shocked to see it on mine.