I believe the problem is the changes of your drives. UFT kind of always "assumed" that everything was on the C drive. The other problem may be in how you copied your UFT to a CD. Did you make a sqz backup and copy the sqz to the CD, or try to just copy the project? I'm not sure how the patch affects things, either; but I probably would have tried putting the program on the computer prior to the patch to make sure the patch was needed. These things can be pretty finicky.
Here is the link for our group's site on the Patch and XP info. Perhaps it will help you a bit more. www.rugpo.com/XP_UFT.html