yea, at this point I would try what droz said. just get rid of the C:\1L2 1946 and keep it in the steam location. steam must be doing something to keep you from doing what alpha said. And droz says steam is giving you patched up version from 4.09. so just target your patches there.
If you had a disk like me, you would have had to patch up from 4.07. but i hate steam, so i don't mind doing the extra patching.
I think your in business now! here's another guide on conf.ini that looks pretty good detail.
http://www.warbirdsofprey.org/index.php?topic=18.0