Strange problem with old DOS games under XP

OK, I'm trying to get to old DOS games, specifically Master of Magic and Master of Orion to work on WinXP. Here's the weird part:

They both worked fine on Win2k. On WinXP, if I try to run them off my hard drive, I get an error message that just reads "Cannot execute c:\master of magic\magic.exe".

If I try to run them off the CD that they are burned onto, the games will launch properly. However, I can't play off the CD because the games attempt to save files to their root directory and this only works on a hard drive, obviously.

"Compatibility mode" doesn't work either.

Any ideas why the games would run off the CD but not off the hard drive?

<b>1.4 Ghz AMD T-Bird underclocked to 1 Ghz...just to be safe!</b>