First install patch 2. I don't recall what the original release and first patch version numbers were, but the second patch includes everything from the first patch, if it is needed for your release.
The DRM free 'patch' is an executable file equivalent to the patch 2 version, but without the copy protection, so the zip file download needs to be extracted into the DKS game folder after patch 2 is installed, replacing that version of the Divinity2.exe file.