Install from Steam.
Go to C:\Program Files (x86)\Steam\steamapps\common\Dungeon Siege 1 and run DSVideoConfig.exe.
Edit C:\Users\...\Documents\Dungeon Siege\DungeonSiege.ini:
driver_description = Primary Display Driver - Hardware TnL
width = 1600
height = 900
bpp = 32
Run the game (exe file is located in C:\Program Files (x86)\Steam\steamapps\common\Dungeon Siege 1\DungeonSiege.exe).
Savegames are in C:\Users\...\Documents\Dungeon Siege.