That is not the problem here though. Windows is kind enough to let you know when you have a problem with 16-bit application.
It is far more likely that galonrever's disc-drive is having problems reading the disc. In fact, I would suggest checking event log for any errors at the time of attempting to launch FS2 setup. Log of administrative events can be found in Control Panel --> Administrative Tools --> Event viewer --> Custom views --> Administrative events. If there was any sort of error Windows could recognize, it would get logged here.
Furthermore as was previously suggested, he could try to copy contents of the discs to local hard drive. Any read errors during copy process would also get logged to administrative events. Just make sure you copy each disc to their own folder.
Now, if you were genuinely asking that, then the answer would be more complicated. If you want to convert 16-bit apps to 32-bit, then you would need source code, lots of effort and time. As for wrappers, no. But you can run either emulators or virtual machines. Well, emulators in this case would be self-contained minimal virtual machines, usually made to run old MS-DOS apps (see DOSbox). To run newer Windows 16-bit apps, your best bet would be to either install linux virtual machine and run them in Wine, or install Windows XP virtual machine. Virtualbox would be the best free choice to run any virtual machines. Windows 8 Pro comes with Hyper-V which you can use instead. I couldn't get networking to work with it no matter what I did though, so I'm still using Virtualbox myself.