Windows 7 has support to applications which use 16bit subsystem as working algorithms. Your other software applications have this ability and they were created using this subsystem. That's why Windows 7 won't run Muppet Calendar no matter what you do.
I suggest using Virtualbox in order to create a virtual machine inside your Windows 7 OS. Then install a version of Windows close to Windows 3.1 on that machine and the suggestion would be Windows 95/98. These versions were not released as free but if you manage to get a copy of an installation disc, the operating system will not require you to activate it and you can legally use it for free. Then copy the application inside that Windows machine and run it.