Ok, so to be sure,
you have win95 osr2 working on 512mb big image, right?
Cannot be your whole problem about MBR? You only copied win95 data, but system disk should be correctly formated.
Well, can you install diablo2 on pc?
Diablo2 has recomnended 32mb of ram, giving more is wasting resources. Bigger ram block must be emulated.
I saw the “j” in the past, dont remember what it was…