Can’t Run 16-Bit Windows Program Error

I am having troubles installing a software. An error keeps appearing when I tried installing and reinstalling. The error is
Can't run 16-bit windows program. insufficient memory to run this application . Quit one or more windows applications and then try again.
I tried running the application compatibility to launch it but it did not work. I can't figure out what is causing this error to appear on my screen. I don't have any 16-Bit application on my computer. I tried a system file check but not succeeded. I also tried to go back to my restore point, but my last restoration was almost a year ago.
I am using a HP Compaq Presario CQ40-310AU laptop with Windows Vista Service Pack 2 32-Bit OS, 2Gb DDR2, 250Gb 5400 RPM HDD Speed. I want to know if I upgrade my OS to Service Pack 3, will it help? I tried everything, even Hijackthis clean but no effect, run my anti virus, still no change. Is this another registry error? Or do I need to reformat my system? I have googled my problem, they say it an Autoexe.nt something may be corrupt. What do I need to fix this dilemma? Please help people.
