To install the patch you can either use the RUNME.BAT batch file from the
  Stonekeep main directory or you can type PKUNZIP -d -o SK_V12.ZIP and then
  press <ENTER> from the Stonekeep main directory.

To start the game after installing the patch:
If you are using DOS, then type SK from the Stonekeep directory and press
  <ENTER>.
If you are using Windows 95, then double-click on the Stonekeep PIF file
  (skull with black background).