Picking up this old thread...
I have always used Compatible mode, for everything up to win8.
AFAICT if you use Compatible mode, you can move the HD into another machine (or restore a Trueimage image of it onto another HD in another machine, etc) and it will work.
But if you use Enhanced, you get a dependency on the exact type of HD controller being used. I have found that a drive installed (from new) on an Enhanced IDE interface is not readable when the interface is switched to Compatible.
It's like RAID controllers - they are all different, each with its own drivers, so if you build a PC you need to buy two controllers (or two motherboards if the RAID controller is on the MB) in case it blows up and then you need the spare to access the data on the hard drives. Been there, done it...
A year ago I did some tests, on a "throwaway" winXP installation on a 3GHz 2 core E8400 PC, and found almost no measurable difference in performance between Compatible and Enhanced.
I think the reason for the lack of performance difference is that modern hard drives do all the obvious stuff like command queuing and they have huge caches.