Not sure what issue you have, I have not seen any issue running 32bit apps. Run lots of them.
Yes Windows will virtualize some system folders for them. But that is needed else it would not run. part of the emulation. Eg System dlls must be loaded from Windows\SySWOW64 and not System32\ folder, (That it is called 32 is just for combability reason. for 64bit version it contain 64bit version of dlls)