Are you talking about SETUP.EXE file inside Setup folder on the game CD? Or running it indirectly via Autorun.exe. If running either of them gives you the message you posted, it means that the file is corrupted so Windows fails to execute it. CD may have deteriorated to the point that it can't be read or something's wrong with your optical drive. You could try and see if it works on another computer, if possible.
Regarding patches, these come after installing the game. Official 445 Patch comes first, then the AiO Patch. Drakan 10th Anniversary Mod is optional and is only needed if you fancy extra post-processing effects.
It might be the easiest to get a copy of already setup game as Arokh's Twin suggested, the extract and play way, plus it ensures the game files aren't damaged and the game is properly patched to the latest version. I have it on my Google Drive
. If you can't open the file, you need to download and install 7-Zip
. Then you can just extract Drakan folder and play.