You did not follow the installation instructions correctly, then. The game cannot be ran from a subdirectory unless you follow a very specific procedure, otherwise you get the error message you described.
Read:
http://www.abandonia.com/vbullet/showthread.php?t=12803
Other than that, you can also burn the files to a CD and run it from there - it will work perfectly that way.
(_r.u.s.s. testing mod powers- test)