Did you contact Gamersgate? They are pretty clear about it supporting DVD or download versions of D2:ED...
Maybe there is a glitch with US / UK English versions? If they were specifically looking for UK English, though, you'd think they would restrict where their version of FoV was available.
Are you running the FoV installer as administrator?
Did you try re-installing D2:ED? If the install program is checking the registry for the D2:ED location (assuming it does have such entries, commonly used so patches can check the install version and path of a game), but the entries were removed by a registry cleaner or a system restore, etc, that could be why it doesn't find D2:ED.
