1) BACKUP all of your data: cars.wad, anim.wad, driver images folder, gamesaves folder, f1config.cfg file, circuits folder, etc(if you've made changes to these), and make sure you have the latest drivers for everything possible: Graphics cards, controllers, soundcards etc.
(2) Uninstall GP4 via Control Panel--->Add or Remove Programs.
(3) Restart your system, then re-install GP4.
(4) Install the patch.
(5) Copy & paste your backed-up data, that I mentioned in point 1. This is the only way to put your current mods back into the game, until a decrypted gp4.exe appears(GPxPatch also needs this to work).
(5) Go to the Workshop/Credits section, in game. It should say: version 1.02 (as opposed to v 1.00). This confirms that the patch has installed correctly.
(7) Play the improved game!