In my case, I had never commented out anything in config.nt.
As I wrote before, the error message stating that NTVDM has "encountered an illegal operation" occurs even in Safe Mode, when avast is not running. But this started only after installing avast, so there is no question that avast is involved, if only its installation. Everything that needs NTVDM is affected. So the answer is: No, it's not just one 16 bit program that is blocked.
Setting the VDD in the registry to contain aswMonVd.dll prevents the error message from being displayed. That is all. It might be getting me one small step further, but I can't tell.
So... Even if v4.5 has solved a problem related to the blocking of scripts, or whatever, I'm still stuck with two installations of WinXP on which I cannot install all the applications I want.
I'm not really trying to run 16 bit programs. I'm just trying to install programs, and not just old ones.
For example, Yahoo! Messenger is not old at all. But, as other people have noted a few months ago in other threads, any application that uses InstallShield (or certain versions of InstallShield) need NTVDM because there is some 16 bit component to it. And I can't decide which InstallShield an off-the-shelf application uses.
I hope that someone reading this will be kind enough to point me in the right direction to make NTVDM work again.