I didn`t really alter the .cnf apart from removing the # (and also the couple of SPACEs - it didn`t work otherwise) next to HDD section. So it looks like this:
Then named my game dir like above - hack\game - and set up D-Fend paths accordingly.
Maybe just try that original config and make hack\game dir in your C: drive with the .exe and everything. The access should work then. If the display`s garbled, try adding that ANSI line from readme into CONFIG.SYS.
Last resort, try pure DosBox or D-Fend (easier to set up)...I suppose these take care of ANSI automatically.