Yeah, I kinda have it working. After the 3rd party installer, I used VDMSound to run these three programs: the setup (for sound), the patch, and then the daggerfall executable to run the game. But I don't think this is the wise way to go from reading the threads on this message board:
http://www.elderscrolls.com/forums/index.php?act=idx
Sounds like this might cause problems down the road with invisible monsters. Looks like Dosbox is probably the best option, but I haven't tried it yet.