Good news folks...
A Downloader Trojan (TrojanDownloader.Win32.Dia.a)placed a program
called Winad Client on my machine. This is the program that has been
removing autoexec.nt and messing with config.nt & command.com.
Last week I replace all those files but after a reboot this weekend
the 16 Bit issue came back which i did not discover until this
morning, only hours after Norton Antivirus found the
Norton AV 2004 could not remove the trojan. Nor could AdAware SE
locate it. But PestPatrol ( http://www.yqcomputer.com/
) found the
trojan and removed it.
After some web searches on this Trojan, I discovered the installed
"Windupdater" program on machine is called Winad Client and it was
easily removed via Control Panel/Ad-Remove Programs (how silly).
Ironically afer the program is removed your browser is forwarded to a
Windupdater Url promoting Spyware removal.
Further scans show no more Downloader Trojan and the 3 Windows System
Files are staying intact.
I would like to add that in my opinion this issue is not an Windows XP
SP2 issue. As far as i can tell from the various post, for most people
it's just a timing coincidence around their resent install/up of SP2
and the prolification of this trojan. Furthermore, from my part, I am
looking further into whether this trojan arrived via my installation
of the CorelDraw 12 SP1 with it's notoriously invasive & unremovable
Update Manager program by InstallShield, since the timing is more
correct for my issue and the fact that the Trojan ends up promoting
various Warez Utilities.