GOG,
Your version of Age of Wonders 1 is pretty much exactly the same Version
(with added GOG-related start-up-files) as the physical german CD-Release,
all the content is included in your Version too.

So why did you block the Language selection system? (not a rethorical question actually)

And how can we work around/fix it, if we have the Original retail CD?

If you want an actual response from GOG, then your best bet is to contact support. There is no guarantee GOG will respond on the forums.

Here is a link for the German language pack: https://www.validstrategies.com/files/file/9-age-of-wonders-german-language-pack/

The GOG version is 1.36. Let me know if you want to revert back to the CD retail version (1.0). I have a link for that too.

Thereunto, I have an original german, physical retail version.
That's how i know both versions are the same and
GOG simply blocked the Language Selection part.
(even editing the registry-values did not help)

And thank you very much for that link! :-)
Not only German Language is now enabled by default,
you also can enable all the other Languages again.

Now i can again play with a Friend who cannot speak read/english.
(the Retail Version does not work on his Windows 10 PC,
runs fine on my Windows 7 PC though)

Wonderful!