DOS requires a FAT partition to boot. Win9x requires DOS. The VM image would have to be a booted DOS session with NTFS support already loaded. Focus on getting this much working before adding Windows.
No one has ever read the instructions for K452stub and used it correctly. Its time has passed so I'll delete it.
When apps start then stop, enable api logging and monitor the kex debugger.
Several years ago I had enough success with KM74_31 to recommend it. But I haven't tested it lately and didn't have the CPU or ram for FF.
Good job! What CPU?