Well heres your problem, after updating the patch, you gotta replace the loader again, with 1.11B version. That was the step you missed becaise the 1.09 loader doesnt work with the 1.11 patch.

The best thing to do is make 2 diffferent folders, one with patch 1.09 files in them and another one with patch 1.11B files in them. So then you can copy and paste the files in the d2 folder depending on what patch you want to play.

So dont make 2 diablo 2 folders, just copy all files corresponding with the patch files mostly all the dll. files, game.exe, and patch_d2.mpq adn make 2 seperate folders for the 2 patches.