16 bit ap operation freezes XP Pro

Running a year-old Dell with XP Pro SP2 and a 16 bit ap that has run OK in the past. In fact the ap does everything OK until it tries to write output (HPGL) to a file. Then it hangs and the mouse pointer disappears. (the file actually is successfully written in the target location). The only way out is Ctl+Alt+Del and "kill" the ap, which results in a NTVDM error box and then a subwindow that says the 16bit subsystem will close. After all that I can restart the ap and run with no problem until I attempt another file output. Also, an attempt to use the ap install CD will not run the setup.exe file. I suspect some corruption in a windows 16bit subsystem support file but I'm clueless as where to look. Tried sfc /scannow without any change happening. BTW - This ap's CD autoruns in another XP Pro SP2 machine.

I'm not sure but I suspect some change in the system recently caused this. I attempted using a "fix" utility that repairs the config.nt and autoexec.nt files. No change. I understnd that a patch from MS under SP1 created some problems, but SP2 fixed that. This machine came from Dell with SP2 and ran the ap OK. I've tried the 95/98 compatibility settings for this 16 bit ap with no success. Another ap from the same vendor runs just fine and, in fact, is of an earlier "vintage" than this one.

One final item: This ap uses a security key and the driver for it is current. My knowledge of the ap operation is that it "checks" with the key BEFORE it performs an operation such as a file write, so if it was a key query error, it would hang sooner. It also checks the key at program startup and that works OK.