Windows 7 64-bit cannot run 16-bit applications. You will need to install XP Mode to run a 3.1 application. If after installing XP Mode the application does not work, then try setting Compatibility Mode to Windows 95. Lastly if that does not work, you will need to install a stand alone Win 3.1 in a virtual environment.
I recently bought a piece of software (Link ----->) (http/) that runs on Windows 3.1. I run Windows 7.. How do I get the software to run correctly? Do I need to have Windows 3.1 installed?!
Try Yimman's suggestion first. If that doesn't work, Windows 3.1 runs quite nicely inside of DOSBox. Keep in mind that DOSBox has a fair bit of CPU overhead (it's an emulator rather than a virtual machine) so performance may vary.