Aaaah, Borland Compiler 3.0?
Wow, that takes me back quite a bit. I'm not sure if it works as expected under Windows XP, but have you tried running in full-screen mode? On the command prompt, press Alt-Enter to go into fullscreen mode and retest your application.
I do know that conio.h is not a standard C++ library, and it's given me lots of problems before, so the real issue might be in how that library functions. Can't you use a more modern compiler, for example, the MingW that ships with the http://www.codelite.org/