This is actually the drawback of using XP Mode. Although it increases compatibility regarding basic functionality, it will give you major errors. The solution is very simple. Instead of using XP Mode, try installing VirtualBOX and create a Windows XP machine. It will run virtually, but you will have 100 % success in using the application because, although you will emulate Windows XP, it will run in native form, without interacting with resources from Windows 7. On their website, there is a FAQ which explains how to create a virtual machine. Install VirtualBOX, install XP and then drag and drop the setup file of your application inside Windows XP. Make sure to install VirtualBOX additions.
This will surely help and prevent any errors with the application since you will be working in an emulated environment with 100 % functionality of the original file system.