yes, OP1 is a 16 bit program. no, "program files (x86)" is for 32bit programs - 16bit programs will not run in there (nor will it in any other place on a 64bit OS - have been running xp64 for going on 5 years)
you will need to either use dosbox (with windows 3.1) or something along the lines of virtual PC/vmware. the latter is preferable, due to much higher performance (though, it may not matter with op1)
Dosbox (with windows 3.1, sound drivers, etc installed) (http://www.megaupload.com/?d=96KM09PK)
you will need to modify the config to have
mount D <windows CD letter>:\
before "win" (the last line in the file)
when windows loads, run setup.exe on the CD.
of course you need to either have the op1 CD or iso image (mounted with daemon tools) to do this.