I have tried different port numbers. I have also checked to see whether the port is in use by some mythical device concocted by XP. I have also tried the "latest" Pico software R 5.11.0 on the remote off-chance that someone in Pico has fixed the important bugs instead of just piddling about with bells and whistles.
I note that many, many users experience difficulty running a parallel-interface Picoscope under WinXP. I seriously wonder whether *anyone* has had any success. I suggest that whether you choose to blame XP's hardware abstraction or not, you are failing to deal with its foibles.
I myself have experienced innumerable problems with "legacy" kit using DOS ports under Win2000, another NT-derived OS. I know from bitter experience that trying to hit a port in software, even using bought-in virtual devices, is non-trivial. If you understand the words that you use, viz, "virtualize" and "layers of abstraction" and were not just trying to intimidate a complaining punter by parrotting obscure jargon, you should be in a good position to write a proper driver that will work. There again, perhaps you don't really understand Windows. I am postponing purchase of a top-end Picoscope until I can be confident it will survive the next change to the OS. On the showing so far it could be money down the drain.