SYMPTOMS:

Windows XP/SP2 or Windows 2000 systems generating below message:

"The system file is not suitable for running MS-DOS and Microsoft Windows applications. 
Choose 'Close' to terminate the application."

This occuring after installation of Service Pack 2 for Windows XP or occuring on Windows 2000 
computers after recent updates from Microsoft. 

DISCUSSION:
Like other applications the setup software used for the installation makes use of 16-bit Windows technology
which requires a valid AUTOEXEC.NT, CONFIG.NT or COMMAND.COM file to be present in the system. These files,
which are part of the  Windows 16-bit subsystem as it ships with Windows 2000, Windows XP, and Windows 
Server 2003, normally reside in the "System32" subdirectory of the Windows installation directory.

Installation of Windows XP Service Pack 2 or other recent Microsoft updates  on an otherwise "healthy" 
Windows XP/2000 system may delete one or more of these files. As a result, when trying to run certain
applications which make use of 16-bit technology an error message like the following may be displayed:

"16 bit Windows Subsystem - C:\WINDOWS\SYSTEM32\AUTOEXEC.NT. The system file is not suitable for running
MS-DOS and Microsoft Windows applications. Choose 'Close' to terminate the application."

The error message can be misleading, because it is displayed even if one of these files is actually
missing.

To verify whether you have the file, type "%windir%/system32/" in the address bar of an Explorer window.
If there is no AUTOEXEC.NT, CONFIG.NT or COMMAND.COM file proceed as follows:

Browse to "%windir%/repair/" (usually "C:\WINDOWS\repair") 

Right-Click and Copy the missing file 

Browse to "%windir%/system32/" (usually "C:\WINDOWS\System32") 

Right-Click inside the window and Paste the file 

The error condition described here may also be the result of corruption of one or more of these files,
in which case the above procedure may be helpful to restore a valid file.

################################ From Microsoft Website #############################################

SYMPTOMS

If you try to start or install an MS-DOS-based or a 16-bit Windows-based program on your Windows 
XP-based computer, you may receive an error message that is similar to one of the following: 

16-bit MS-DOS Subsystem

C:\Winnt\System32\config.nt
The system file is not suitable for running MS-DOS and Microsoft Windows applications. Choose 'Close' to terminate the application.

16-bit MS-DOS Subsystem

config.nt
The system file is not suitable for running MS-DOS and Microsoft Windows applications. Choose 'Close' to terminate the application. 

16-bit MS-DOS Subsystem

C:\Windows\System32\Autoexec.nt
The system file is not suitable for running MS-DOS and Microsoft Windows applications. Choose 'Close' to terminate the application. 

CAUSE

This issue may occur if one or more of the following files are missing or damaged: 

• Config.nt 
• Autoexec.nt 
• Command.com 

* OWN SOLUTION:

Do a file search for "config.nt, autoexec.nt, command.com"

Found:
C:\WINNT\repair\config.nt
C:\WINNT\repair\autoexec.nt
C:\WINNT\ServicePackFiles\autoexec.nt

If one of them (e.g. autoexec.nt) is missing in C:\WINNT\system32, 
then copy the missing one to the system32 folder


* Microsoft SOLUTION:

To resolve this issue: 1. Insert the CD into the CD drive or DVD drive. 
2. Click Start, and then click Run. 
3. In the Open box, type cmd, and then click OK. 
4. At the command prompt, type the following commands, pressing ENTER after each command:


expand CD-ROM Drive Letter:\i386\config.nt_ c:\windows\system32\config.nt 
expand CD-ROM Drive Letter:\i386\autoexec.nt_ c:\windows\system32\autoexec.nt 
expand CD-ROM Drive Letter:\i386\command.co_ c:\windows\system32\command.com
exit  
5. Start or install the program. If the issue is resolved, do not complete the remaining steps. If the issue is not resolved, go to the next step. 
6. Note: The Command.com file is not edited or created in this in the following process. Because of this, you may have to expand it from your Windows XP CD-ROM. 

Start Notepad. 
7. In Notepad, type the following entries:    dos=high, umb
device=%SYSTEMROOT%\system32\himem.sys
files=40
 
8. On the File menu, click Save As. 
9. In the File Name box, type Config.nt, and then click Save. Close the Config.nt file. 
10. On the File menu, click New. 
11. In the new blank document, type the following entries: @echo off
    lh %SYSTEMROOT%\system32\mscdexnt.exe
    lh %SYSTEMROOT%\system32\redir
    lh %SYSTEMROOT%\system32\dosx
    SET BLASTER=A220 I5 D1 P330 T3
 
12. On the File menu, click Save As. 
13. In the File Name box, type Autoexec.nt, and then click Save. Close the Autoexec.nt file. 
14. Start Windows Explorer. Locate the Config.nt file, right-click the Config.nt file, and then click Copy. 
15. Right-click the %SYSTEMROOT%\System32 folder, and then click Paste. 
16. Locate the Autoexec.nt file, right-click the Autoexec.nt file, and then click Copy. 
17. Right-click the %SYSTEMROOT%\System32 folder, and then click Paste. 
18. Locate the Command.com file, right-click the expanded Command.com file, and then click Copy. 
19. Right-click the %SYSTEMROOT%\System32 folder, and then click Paste. Restart your computer. 

MORE INFORMATION
For additional information about MS-DOS-based programs in Windows, click the following article numbers to view the articles in the Microsoft Knowledge Base: 
305521 An error message occurs when you run an MS-DOS or 16-bit Windows program 
314106 Troubleshooting MS-DOS-based programs in Windows XP