For anyone getting an "Invalid or Incomplete Installation" error message when trying to patch a retail release to 1.1 for 1.2, here are some steps to try. Most of them are common knowledge, but I had never seen the last bit mentioned anywhere. It's what was causing me issues.
1) Use the original DRM'ed .exe and paul.dll (for those that swapped in the GoG.exe)
2) Turn off any antivirus/malware monitors
3) Run the patcher as admin
4) Delete your after market DLC .dzip's (Troll, Alchemist Suit, Mystical Merchant etc...) in the Game Folder > Cooked PC folder. (*Caution* not all the .dzip's in this folder are aftermarket DLC, so take care to only delete the correct files).