How bad are these 'bugs'? In other words, what if I use FTM 2006 with Windows XP but without the v16 upgrade? And, what bit computer is ideal or minimally required to avoid problems?
It would work fine.
All programs are always fixing bugs.
But the upgrade to version 16 is free so whay not take advantage of it?
I haven't used 20006 for a very long, time but I still have version 16 on my test computer running in XP Pro. It runs fine although it can't do many of the neat things in 2012, but that is a different story.
If you are going to use Vista or Windows 7, I would advise 32 bit
MY other suggestion is make sure that you are using at least 4 GB of RAM in Vista or Windows 7