Older games like Lego Island used depreciated versions of direct x (I think it uses version six) and anything less than Direct X 9 is not supported on modern operating systems like windows 8 and on.
That's incorrect. The issue is that new installations of DirectX do not include certain files, such as d3drm.dll which these games rely on. DirectX 6/7 can't be installed via their installers, so you have to manually get the right .dll files.
Futhermore, most of these games assume:
1) Administrator Rights
2) 8/16 bit colour modes
3) Window Mode locked to 800x600
4) No such thing as DPI-scaling or Aero
Those kinds of things can really forget with old games, which is why you need to set up a lot of compatibility options.
Only game I needed to run a VM for was not a LEGO game; it was Hot Wheels: Mechanix, which runs just fine but does not display graphics. All LEGO games run on Windows 10.