Thanks Christian for the feedback; most of it was way above my head but useful anyway. Just to correct a couple of errors in my previous message, I am running Windows 8.1 not Windows 7. Also I meant to say I have been a happy user of Charon for 16 years not 26! Senior moment.....
Anyway, this is what I did and Charon works as normal, no crashes, no bugs (though I haven't tried blinking).
I created a folder on my desktop, unzipped Charon to this folder, then added my FITS images and copied dos4gw to this folder too (its on the Guide CD in the WATCOM folder).
To open Charon drag and drop the Charon icon in this folder onto the DosBox icon,and use in the normal way.
After measuring your image press 'Esc' to get back to the dos screen. Type 'charon' to load another image, or 'exit' to close Charon.
There may be better ways (I arrived at this by a process of trial and error) but have not had any problems so far.