To hazard a guess, your patcher can't find either the sh3 executable or its own executable. Steam hasn't changed the game files in a decade. I just did this patch with the Steam version last month.
Remember the instructions: unpack the patcher, then copy sh3.exe into the patcher directory. I would also recommend running Patch_SH3.bat from a command prompt, changing to its directory first, rather than double clicking it.
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