The following is a much easier sollution to applying the patch:
After copying the 'GAMEDATA' files as mentioned by the original poster, install the game conventionally through the actual setup program so you can then copy the modified files after applying patch 1.01. Then add them into the "custom made" directory you put all the 'GAMEDATA' files into - there will be quite a few instances where it will ask you to replace a file - only replace CURRENT files (take note of the dates! E.g. the old ones will be 1998, when the game was made).
Or, you could use this modified Lancher: http://quick.mixnmojo.com/software
- then apply the patch.
P.S. Disabling Hyper-Threading in your BIOS seems to have stopped the random crashing/lockup issue.