Got the same error on my second computer when trying to Install Patch 2 (32 bit desktop).
My config:
AMD K6 2 500, 192 Mb Ram, Ali Chipset Asus P5AB Mainboard, ATI Rage IIC PCI 4 Mb (Yes, it is a crap, but does not overheat in this PC, and it is a accelerated 3D card), Win 98SE, DirectX 8.1 german, Soundblaster ISA soundcard (ISA sound card must be there! I´m not allowed to replace it).
Patch 2 also refuses to install if 24 bit desktop is displayed, but it means that it does not support 24 bit.
Workaround:
Transfered all patched files from main PC over LAN.