If you are using Windows XP, did you install the game from an account with administrative privileges?
The patch checks the registry for the current version and install path.
I think this will work on XP, but I'm not sure (it does under Win9x);
If you are comfortable with computers and tweaking stuff manually, click on Start | Run, type in regedit and hit enter. This will/should bring up the registry editor, where any changes made are done immediately and without an undo function, with possible serious consequences. Expand the tree HKEY_LOCAL_MACHINE\Software\LarianStudios\BeyondDivinity on the left side of the program, and check that the listed path and version are correct. You could try lowering the version number.