Problem found with a work-a-round.
OK, after a day of investigating and installing version 5.1 several times and copying 5.07 dlls to 5.1, I have found the problem.
The problem was in the OS2\dll directory. It was one file. The file is
dspres.dll
The one found in version 5.1 is 455,064 bytes
The one found inversion 5.07 is 395,096 bytes
Backup dspres.dll found in 5.1. os2\dll directory
Copy the one from 5.07 os2\dll directory over the one found in the 5.1 os2\dll directory
A reboot is necessary for the change to be effective.
OpenChat.exe now works for me. Tested on several partitions.