I haven't tried it yet, but I guess you can simply overwrite the otvdm files with those from the latest build. On he other hand, what's the advantage, as long as the current WineDVM works?

Windows 3.11, yes. You can download preconfigured packages from the internet. Works well for old Win3.11 games like Stars!, Mordor 1, Exile 1, Space Empires 2, etc. If you're specifically interested in a package preconfigured for Stars!, you could try to search for dosboxstars.
I once tried to run a PCem package with Win98, but ran into a problem I couldn't solve immediately (the Win98 boot process was looking for certain DOS files not included in the package), and I didn't want to spend a lot of time investigating. Someday I may try again.

There is almost certainly some kind of memory bug with WineDVM 0.7. While playing Castle of the Winds, sometimes the graphics start getting replaced with various items and causes created saves to become corrupted. Presumably, there is a bunch of under-the-hood changes to modern WineDVM that could help prevent that. Considering that your initial post mentioned that Stars! wasn't quite working right, I figure that nipping issues in the bud is a priority.

Also, I believe that OTVdm as a project is dead. The last commit was from six years ago, so I assume that the creator made WineDVM as a successor.

Regarding updating, I believe that you can't use files from an uncompiled program to overwrite those of a compiled program. In a uncompiled state, you can say that the files are like eggs, flour, sugar, and so on. The end product is a completely different entity.

Update / Correction
I did some analysis and a number of tests today, and I would like to summarise the results, which are somewhat different from what I said yesterday:
- Stars! runs fine in DosBox For Windows (3.11). Performance could be better, and I haven't found a way to enlarge the Stars! screen to full size fullscreen (there are black regions on the left and right sides of my 1600x900 monitor), despite editing the dosbox.conf file, aspect=false, fullscreenresolution=1600x900.
- Stars! runs fine in an otvdm version from 2019 (you find it under the name starswine4 on the Stars! Autohost site). Excellent performance, real fullscreen display on 1600x900.
- Stars! runs fine on the latest otvdm build (filename otvdm-master-2094.exe), which is two days old, EXCEPT that it doesn't allow editing the race list when setting up a custom game. I started and saved a custom game with a custom race in starswine4, exported the savegame to the newer otvdm system, and I can play this game there, too. There may be a way to get this build of otvdm working properly, but I haven't found it.
Bottomline for me is that I'll use starswine 4 to play Stars! because of its performance and display properties. There is no need to use the newer builds of otvdm, as long as the old one works.

Regarding terminology: I'm not sure, but possibly otvdm is called winevdm (search this to find the latest builds) now, but the files are still named otvdm-XXX.exe.

Have you considered just setting up a Windows Subsystem for Linux, to see how that compares if you install Wine?

No, I haven't and I won't. Nothing against Linux, but I'm a player with some technical background (not really a lot), not a technician who plays occasionally. I had a problem playing Stars!, and with the help of this thread (and your help!) and some follow-up investigations and testing, I found a solution which lets me play Stars! to its full extent. A few questions remain open, I can live with that. As a by-product, I have even learnt something about emulators and virtual machines and found a few tools, which I'm sure I can use when I play other older games from the times of Win 3.11, 95 and 98 (which I often do), DOSBox for DOS games I've known quite well already. Familiarising myself with a new OS is beyond the scope of my ambition, to be honest - perhaps when I lose interest in playing some day :-), or when I'm motivated enough to do so for other reasons.

Stars! !!!

Love that game. Have an "8-pack" of serial numbers I bought from them way-back-when. Still dabble with it once in awhile via a 32-bit Win7 VM that I have.

Perhaps Stars! was using some now-defunct windows "call" to handle the part that wasn't working. When you ran the special configuration of DOSBox, a DLL got loaded that supports that "call", allowing it to work properly. Then the DLL stayed loaded. Thus subsequently working in your normal configuration.

Just a WAG, but could account for it.

Thanks to Greywolf, I figured out how to update WineDVM to the latest build. Stars!, Pilgrim's Quest II, Oregon Trail II, and Castle(s) of the Wind are all updated.

Are you saying that you can edit the race list (page 2) when you set up a new custom game in Stars! (when you use the new build)? Like adding or removing players, changing existing ones, etc? In this case: Did you anything else except raplacing the contents of your otvdm folder by the new build? This would be great news for me, because it would prove that I made a mistake or missed something when I tried to use this system to run Stars!
If yes: Would you mind to explain what you did? Which build did you use? 1056 from 2019 is the most recent stable one (and Stars! custom game setup works fine for me when I use this build), while 2094 is the the most recent development build (where I can't edit players). I would prefer to stick to the development builds, as they let me do other things I can't do with 1056.

To avoid confusion about terminology. "otvdm" and "winevdm" mean the same thing. A quote from the winevdm site:
"A programmer who calls himself or herself otya128 has adapted the Wine ("Wine Is Not an Emulator") software into a system called winevdm (also otvdm) so that old Windows programs (including installation programs) can run in 64-bit Windows as if they were ordinary modern Windows programs."
I used "otvdm" until now, because this is the name of the exe you download ("otvdm-master-XXXX.exe"), but if winevdm is more popular and better known (and because of its WINE roots), I wouldn't mind changing my habits.
Yes, it could be something of this kind. I guess I'll never find out (there are worse things in life :-)).

Afraid not. That function definately is broken for build 2096, and I went all the way back to build 2062 to see if that can get fixed. No dice.

What I will do is to open an issue with the WineDVM github page. Hopefully the developer would be able to figure out the problem and set it to rights.

Thanks. The bug must have been introduced since the latest stable build (1056 - WineVDM 0.7 - StarsWine4), where you still can edit the player list.

Quick reaction! Looks like build 2098 works. Can you confirm?

Yup, it does look to work. By the way, I added the manual and technology reference onto the Internet Archive distribution. You might find them handy for whatever a wiki doesn't cover.

Just for info, I have a Stars! install using the dosbox/win3.11 method and it runs fullscreen @ 1920x1080.
It's a little stretched, but looks okay imo.

Here's my .conf for reference

# Config file for profile "Stars!"

[sdl]
fullscreen=true
fulldouble=false
fullresolution=original
windowresolution=original
output=ddraw
autolock=true
sensitivity=100
waitonerror=true
usescancodes=true
priority=higher,normal
mapperfile=C:\Users\<username>\D-Fend Reloaded\mapper.txt

[dosbox]
machine=svga_s3
captures=C:\D-Fend Data\capture
memsize=63

[render]
frameskip=0
aspect=false
scaler=normal2x

[cpu]
core=auto
cputype=auto
cycles=max
cycleup=500
cycledown=20

[mixer]
nosound=false
rate=22050
blocksize=2048
prebuffer=80

[midi]
mpu401=intelligent
mididevice=default
midiconfig=

[sblaster]
sbtype=sb16
sbbase=220
irq=7
dma=1
hdma=5
sbmixer=true
oplmode=auto
oplrate=22050
oplemu=default

[gus]
gus=false
gusrate=22050
gusbase=240
gusirq=5
gusdma=3
ultradir=C:\ULTRASND

[speaker]
pcspeaker=true
pcrate=22050
tandy=auto
tandyrate=44100
disney=true

[dos]
xms=true
ems=true
umb=true
keyboardlayout=none

[joystick]
joysticktype=auto
timed=true
autofire=false
swap34=false
buttonwrap=true

[serial]
serial1=dummy
serial2=dummy
serial3=disabled
serial4=disabled

[autoexec]
@echo off
SET PATH=Z:\
keyb none 437
mount C "C:\D-FEND~2\VIRTUA~1\DOSBoxC\"
echo.
c:
windows\win /n c:\stars\stars1.exe -x
Z:\config.com -securemode > nul

-- end

Also, what kind of forum doesn't have spoiler tags?

Good news - and thanks for your help!
What is the "Internet Archive Distribution? And do the two documents you mention contain the same material as the stars! hlp file?