I have been looking for this all over the internet and I stumble into a solution by accident, so I figured I should share my knowledge.

For those looking for a way for have a difficulty selection for the original Diablo. Download the devilutionX mod.

It is amazing. It is an open-source engine and come with a few bonus like :

* Widescreen support
* Run in town and in dungeon (by making the whole game faster though)
* Smooth loading transition
* Skip cutscene by pressing escape
* Play Diablo on Linux

And, for those who don't mind fiddling around, it also offer an easy way to enable all quests in singleplayer (don't know about multiplayer). I was able to make it works by making a variable true by default (named allquests, appropriately) and recompiling the code. Fairly easy if you are proficient with programming,

Don't bother with DiabloPatch because it doesn't work with the GOG version and is dead anyway.

Don't bother with Hellfire because it is awful.