I could be way off base here, but I'd probably start with the 32-bit version of Windows 7 to hack it into working.
First, you want a 32-bit OS -- unless you can get one of the 16-bit OSes virtualized well, but I have no experience with that. 32-bit Windows has NTVDM for running emulated 16-bit apps. 64-bit Windows only has the WOW64 (Windows-on-Windows) emulator for running 32-bit apps.
Also, Windows 7 has a large collection of shims and compatibility layers built in, plus a ton of tweaks you can do with the Application Compatibility Toolkit. I don't know if there are ACT limitations with 16-bit apps though since I haven't had to do any serious work with it since the XP -> 7 upgrade wave.
I don't think I got them all.