I've two questions:
1) HOW DO YOU WIN THIS GAME?!?!?!?!?! The entire world declares war on me for no reason every time,
First of all: of the starting factions, don't pick Venice or Spain, as they are tricky (what with the number of factions around them). Make an alliance with one nearby faction plus with the Papal States, and that usually prevents at least one invasion from the get-go. Don't leave your troops in other factions' territories, unless you have military allowance -- that makes them angry.
Also, from the first round, you probably want to scramble to pick up as many rebel settlements as you can.
and my economy instantly collapses!
From the other topic, where I posted this:
If "manage every settlement" isn't on, turn it on.
Whenever an economic building is available (roads, ports, markets, mines), build them. Build them first. Build all of them. Right from the very first turn, build everything you can to improve the economy, and don't go to war with anybody until you start running large surpluses every round.
Tax every city as high as you possibly can (until the faces hit red). If you've already built every other economic building, build happiness-inducing buildings so that you can tax more.
In the cities in the middle of your empire (i.e. not under any danger of attack), you only need two or three garrison troops. This lowers the upkeep cost.
Try selling your map information. On the same line of thought, send a diplomat on journeys and get trade rights from every single faction (except the ones you are at war with, obviously). Selling your trade rights and map information can get up to 2000 gold.
Transform all of the settlements that aren't in the line of fire into cities. The only settlements that need to be castles are (a) the ones on your borders with factions likely to go to war with you, and (b) tiny islands that get invaded often.
The Pope's vicious Inquisitors murder EVERYONE, even agents who don't have a piety rating, like Merchants, Diplomats, even invisible units like Assassins!
I'm not exactly sure how to avoid inquisitors, other than by assassinating them first. I think they do less to your guys if you have an alliance with the Papal States.
And the vile Pope sits back and eats popcorn while his God-fearing Catholic friends get ground into paste by other Catholics! And this is all on Easy difficulty!
On the very first round, send a diplomat (or make a diplomat), and shoo him straight into Rome to get an alliance with the Papal States. That will improve your happiness with the Pope from the get-go, which gives you more leeway for wars with Catholic factions. If he's about to excommunicate you, donate 2000 florins to the Papal States (I like to keep a diplomat right next to Rome at all times for this purpose).
2) Ah, good to get that off my chest. How do you install the patch v1.2? I downloaded it, but it isn't working. Where do I send it?
I think you need v.1.1 installed first.
If you want, I can give you some of my saves where the economy is strong (from the tenth round or so), but you need v.1.2 for that.