1. Did you use proper switches with EXPAND command? The syntax is
EXPAND [Source file] [Destination folder]
For example,
expand d:i386vgaoem.fo_ c:windowssystem
Remember, run this command from Run dialog or from Command prompt! If you type it right, EXPAND must uncompress the file to the destination folder and give uncompressed file the proper extension, in this case, .FON. If you see compressed file extension, fo_, that means your file is still compressed and can not be used by Windows.
2. Check for the latest update for your video adapter driver – corrupted or outdated driver could cause the problem. To do so, visit your driver manufacturer website or Windows Update website (the first is better).