This is an awkward situation because the application is compatible with Windows XP. However, remove the application completely from your computer and restart it. While it's restarting, go to Safe Mode (press F8 continously). After this process, go to Start > Run > Msconfig. Switch to Startup tab and disable all the apps that you don't need. Reboot the PC again and re-install the School Library System. I have recommended this way to avoid conflicts between other applications and School Library System. Try running the software now to see if it works.
Additionally, download the NET Framework that is required for the software: http://www.microsoft.com/en-us/download/details.aspx?id=1639