Edited the OP, turns out the vanilla Override folder in the New directory was pointed to, and the extra files in the original Override folder caused the resolution exception. Must have contained some widescreen mod files that somehow got misconfigured or mangled – who knows? Edit: The extra files are viewable here, and all date from around 2001, so must be have been from a re-issue of part of another earlier official patch most likely 1.3.5521.
The nasty error occurred after the physical removal of the “baldur’s gate New”, upon which the initial reaction was: 😲