Starting off, there is a good chance for your game to either straight up crash or not run, which is by far the most common issue on newer versions of Windows:

-Navigate to your Steam library
-Find the Dungeon siege installation
-Right click > Manage > Browse local files

It should open up a folder containing the game,which you might want to keep open for the future of the guide, from there on out:

-Find "DungeonSiege.exe"
-Right click > Properties
-Look for "Compatibilitity"
-Tick "Run this program in compatibility mode for"
-Click the dropdown menu and choose Windows XP

Images below, going from Left to Right:

For the multiplayer to work properly, i had to set up the expansion the original disc came with, thankfully people have uploaded it to the internet for our convenience:

-Head on over to: https://pastebin.com/Gcg9qLLp
-Look for "Legends of Aranna Killah Fix"
-Chose from one of the two links below to download the expansion

From there on out, wait for the download to finish and head over to the next step:

-Navigate and open the "Dungeon Siege I (Legends of Aranna) Fix" (Most likely will require WinRAR or 7Zip which i hope you already have)
-Open it, and alongside that navigate to your game installation like in the first section of this tutorial
-With two windows open, select everything in "Dungeon Siege I (Legends of Aranna) Fix" (Either manually by mouse, or click on the windows and tap CTRL+A)
-With everything selected in the first window, just drag all the files over directly into the game folder
-If asked to replace files, click Yes to all.
-Close the "Dungeon Siege I (Legends of Aranna) Fix" and navigate to the game installation
-Find a .bat file called "Reg Patch DS1" and Either run it as administrator or it will relaunch as administrator
-Once in,a small console will pop up with with multiple options, we want the first one so we will type in the number 1 (one) into it, after which the console will patch the game into the registry

Concluding the expansion installed, you're one to two steps away from hosting a co-op game with your friend:

-Either handle port forwarding on your own, or use a private VPN software, in which case i'll defer to GameRanger for it seems to handle well.
-Go to https://www.gameranger.com/
-Click the big blue download button, wait for the download and proceed to the installation
-Once installed, you'll most likely have to create an account for the app
-With your account, the app should be working
-Click Host on the rightmost side of the Gameranger window and select Dungeon Siege 1
-If you don't see the game, which you likely wont, there is only a few additional steps to do
-Navigate back into your original game installation folder
-Locate "Reg Patch DS1" and open it
-This time we want the third option, so just click 3 (three) in the window
-This will create a shortcut folder in C: drive which we can navigate to with Gameranger
-Navigate back to GameRanger
-In the top-left menu, click the "Edit" button, and proceed to Options
-In the options, on the games tab, scroll down and navigate to "Dungeon Siege"
-Click on "Dungeon Siege" and on the righthand side where it says "Location" below it click
"Browse"
-In the browse menu,click "This/My PC" > "Local Disk C:" > "Program Files (x86)"
-If you patched it properly,there should be a "Dungeon Siege 1" folder
-Open the folder, select "DungeonSiege" and tap "Open"
-Gameranger should now properly detect the game and you can host your own game!

Images below (Once again, Left to Right)

In order to obtain a higher native res and widescreen support, you'll need to use an external software, and here's how:

-Navigate on over to http://dege.freeweb.hu/dgVoodoo2/dgVoodoo2/
-Scroll down to Latest stable version, and get the first link for regular usage
-Download the file, and open it
-With the dgVoodoo file open, navigate to your original installation folder
-Once there, transfer "dgVoodoo.conf" and "dgVoodooCpl.exe" into your game installation
-Open the MS folder > x86 folder
-Transfer all the files in that folder to your installation directory
-Open dgVoodooCpl and adjust your settings accordingly, otherwise leave as is
-Head to the DirectX tab
-In the videocard panel, select the best one (Usually GeForce4 Ti 4800) and Max/256 VRAM
-Choose your resolution, and at the bottom disable the dgVoodoo watermark
-Click Apply > OK
-Launch the game, and everything should be to your preference.

Images below (Left to Right):

For any additional tech issues, GenesisFR has written a fantastic indepth guide with various possible issues at

https://github.com/GenesisFR/DS1TroubleshootingGuide

If anything is unclear and you have more issues, feel free to join The Kingdom of Ehb's community discord and ask for help from any of those willing to :)

https://discord.gg/PPsdY3D