Just saw that this might still be open...
BC_Programmer stated:
Setting VGA mode in a DOS application in Vista and later does not work for 16-bit applications.
But you can try reverse compatability mode like I did below on a old system to run XP drivers for 7.
I recently tested a motherboard with an Intel 845 GL chipset with Windows 7 and Intel has no support past Windows XP for my chipset with integrated graphics. I was able to use my XP driver from Intel only by telling Windows 7 to run this driver installer which was an EXE as XP SP3 compatability mode and also select the checkbox to runas administrator. While there are differences between Vista and 7 and you might have a totally different chipset or GPU, its worth a try.
My issue with Windows 7 and this motherboard from 2002 running a Trigem Imperial motherboard out of an old eMachine, (originally socket 478 Celeron 2Ghz upgraded 4 years ago to Pentium 4 2Ghz) was that it would only run 640x480 resolution with generic microsoft drivers with my Intel 845 GL chipset. If I went to a higher resolution such as 800x600 or 1024x768 it would drop to 256 colors. By forcing the installation in reverse compatability mode I was able to get 1024x768 with better than 256 colors.
If this wasnt going to work out for me, I was going to install a GeForce 4 video card into a PCI slot since I am pretty sure that nVidia has legacy drivers that support 7. But this was also just a test to see if this 10 year old computer could run Windows 7 32-bit and to see how well or unwell it ran it.
At some point I want to test Windows 8 on this system, but to do that I will have to remember where I put my Windows 8 beta disc and once I find it, if it will run like Windows 7 does for a short period of time without activation right away or not. Windows 7 32-bit allowed 3 days of use before having to activate the key.