Possibly, but not necessarily. Windows XP does include support for 16-bit software (both Windows and DOS applications), but not all programs will run correctly.
how to upgrade an operating system in windows 7
There's nothing such as "Windows You", but there was an operating system called Windows ME and it was the most hated of that time...
Windows Vista
No. First of all, not everyone would consider Windows an "upgrade." Secondly, Windows does not support migrating a Windows system, so you have to erase the hard drive and do a clean install.
If you upgrade the system through the windows 7 installation menu, it's supposed to keep everything. If you do a fresh install, all your data on the system disk will be lost.
windows xp is the only one i know
Assuming it meets the system requirements, yes.
Windows Vista
No. Windows XP does not support rolling back to a previous operating system, nor is it possible to upgrade directly from Windows 95 to Windows XP.
If a computer is running Windows Vista, it meets the system requirements for Windows 7. One can upgrade from Windows Vista to Windows 7 easily. Microsoft has prepared a webpage named as "Windows 7 Upgrade Advisor" for more information about the upgrade.
The system that the users were making do with before the management decided to upgrade - often called the 'legacy' system, it can be the stumbling block in software projects as the request is usually 'can you make the software run on my legacy system?' or 'can you get the new hardware to interface with my legacy system?'
You can have an upgrade from microsoft or buy windows 8.1 and upgrade the system from there (be sure to back up your important data) or you can just format the whole windows partition and install Windows 8.1