Ah-ha.. You are right, thanks for the suggestion. I bet I need to put the current location of the patched and upgraded game here in the .ini file. I kept the GOG downloaded version unpatched and unedited so I would have something to revert to in case of errors.
The error Wine throws at me says that the game should be played on a 16 color bit depth screen. I'm not sure I can make that change anymore on Mac OS 10.9.. I looked / googled without success. It still seems to play though.
Update -- resolved. After this, I started getting errors that I was out of system memory. Apparently all that testing ate it up and didn't release it. Restarted, removed and reinstalled 1280X800 and the problem went away, game looks great.
Of course, now I'm getting crashes when I go into a building in Sigil - it asks for CD number 255 (??) but that's a much different problem.