I tried...

1. Changing the one instruction, as following bbraun's suggestion.

2. Copying any missing ptch, PTCH, ROV# and rovr resources from my System 7 file.

After step 1, I got a flickering "Welcome to Macintosh" box on the emulator, so I think it's rebooting. Step 2 didn't change anything.

So does this mean that it can't initialize something or other, and is rebooting (obviously QuickDraw's working).