You should not have to restart; the save games are not kept in the game folder. IIRC there is a disclaimer that not all fixes and changes in the patch can be applied retroactively (ie it may not fix a particular problem if it has already occurred, but will prevent it from happening), but the saves are certainly compatible after installing the patch.
In XP the saves are in the folder
C:\Documents and Settings\ %username% \Local Settings\Application Data\Divinity 2\Savegames
or in Vista / Win 7
C:\Users\ %username% \AppData\Local\Divinity 2\Savegames
You may need to set Windows Explorer to show hidden files and folders.
Also, don't worry about ranting in your first post; if people don't have a problem or a question, they generally do not post.
Welcome to the forum.
