It's a common failure and I've watched people try many things to fix it. But I offer only one observation.
Office 97 is not very compatible with XP and all features may not work.
From memory the compatibility tab vanishes if the program was not installed or is on a CD. KB article 301911 writes "Note The Compatibility tab is only available for programs that are installed on your hard disk."
I think the big clue was you didn't "install" but "transferred."
I recently installed a new hard drive (C) along with windows xp. I have kept my old hard drive (F) with windows me because of it's much larger storage capacity. When I right-click on some of the programs, ie; microsoft office 97 and others, in the F drive and access properties there is not a compatable tab avaliable. I have tried transfering microsoft office to my C drive which was sucessfull but, I have to click on each individule file (word, excel, power point) instead of just the microsoft office folder. Also most of the tools do not work, ie;spell check. Any assistance would be greatly appreciated. Larry