Spent all day on this so I thought I would make this post to help others.

If you want to play Ultima 2 with the latest 2.1 Patch from the Exodus Project then just do the following.

Install GOG version of Ultima 2

download upgrade 2.1 from exodus project

extract contents to Ultima 2 GOG install folder (ex. C:\Program Files (x86)\GOG Galaxy\Games\Ultima 2)

DONT RUN THE WINDOWS PATCH. Dont ask me why but the damn thing doesnt work on Windows 10.

instead install or run DOSBOX and run the following

mount C "C:\Program Files (x86)\GOG Galaxy\Games\Ultima 2"
C:
u2up


then follow these instructions

Edit dosbox.conf (dosboxULTIMA2.conf for GOG) and change these values:
cycles=10000 (or greater)
cputype=auto

Run ULTIMA2.COM in DOSBOX to start the game.

For GOG, edit dosboxULTIMA2_single.conf and change the line that
reads ‘ultimaII.exe’ to ‘ULTIMA2.COM’.

The takeaway here is to remember here is not to trust the windows patcher u2upw and instead just run the dos updater and everything worked