Like grrl, I'm also unable to run 16-bit apps. I used nLite 1.2.1 to create a slimmed down Windows 2000 Pro SP4 CD, while keeping both 16-bit support and the Application Compatibility Patch. After installing this Win2k, I first noticed problems when I tried to install an old 32-bit app (UltraEdit v4.3) that uses the 16-bit "stub" installer. Later, trying to run a 16-bit game was also a no-go. In both cases, Task Manager shows NTVDM.EXE hogging the CPU, but neither WOWEXEC.EXE nor the 16-bit app itself ever appear with it. For now, I've downgraded nLite back to v1.0.1. I'm curious: Is this issue being looked at in v1.3 of nLite?