Yes it does support 4bit mode on bits d4 to d7, but without seeing your design or ideally running it on your hex code is not possible to say what your error in Proteus is.
But i am sure that my ckt is correct.
Here i am attaching my proteus file and keil project. i am using p89c51rd2 in my original project but it is not available in proteus so i am using another ic but same core.