Contacted MS, they told me that most 16bit app support was stripped from windows 2000, including the problem I have.
Thier solution was to use a 3rd party product called Tame, that will look for cpu cycles that could be dropped rather than used.
basicly, it will prevent an app from hogging the system during non-used times.
My bad app fix seems to work similar to this, but Tame works much more in depth, so far.
If I can figure out a way to use bad app better, I would be able to do this for free, rather than have to register the shareware.