I have a .bat file called whois.bat. It accepts one argument which is a userid. From the 'Run' dialog box, I want to be able to type 'whois 99999' instead of 'whois.bat 99999'. The file is located in the c:\WINXP\system32 folder but running it without the .bat extension is not working on my computer. However, it does work on some other computers. Is this a setting which can be altered somewhere?
Well, since you informed that an window appears asking you which program would be used to open it, you have a file with unrecognized format with the same name and the answer is the first of two suspects below.
Another program of file with the same name
If you run "whois 99999" and get another error than an unrecognized command, probably you have in your computer another program of file with the same name that is called instead of your .bat.
Try just to rename your .bat file. If it functions after renaming, it is the reason to your issue. So go to Desktop, type F3 and search in files and folders (including hidden and system ones) for "whois". After you locate the other "whois" (probably "whois.com" or "whois.exe" if it is a program) you can decide to remove that file (if not necessary for you) or to rename your .bat.
Missing System32 folder in environment variable
See if your System32 folder is included in PATH environment variable.
Just open CMD and type:
If c:\WINXP\system32 do not appears in the result of above command, do WinKey+Break, then go to Advanced > Environment variables and put c:\WINXP\system32 at the end of PATH in User OR System variables. Do not forget to use ";" to separate paths in PATH variable.