Great story, although it reminds me of the pain of having to suffer from the defiencies of AI in SH3
You might be able to make CAOD work in Dosbox. If I remember correctly that worked for me years ago when I still played CAOD. I can't remember if I ran XP back then or not.
If you try Dosbox I recommend running it through D-Fend Reloaded, which lessens the need for typing dos type commands.