Finally after reading the tutorial here: http://www.holarse-linuxgaming.de/wiki/diablo
I came up with a more simple and easy fix, that is updated for the current stable version of Wine (1.6.1).
Simply download the file below. Extract ddraw.dll and wined3d.dll into your Diablo I directory. Then run ddraw_renderer.sh and enter diablo.exe for the application and gdi for the rendering mode. That's all; enjoy Diablo I.
It should also maybe work for other older DirectDraw games as well. It works for sure with Diablo's expansion, Hellfire. You need to install the .dlls and then enter the name of the main .exe. Do not use quotes if the .exe has spaces, as they are already included in the ddraw_renderer script (e.g. Frozen Throne.exe).
Also, this is not a permanent solution. The result is somewhat glitchy but makes Diablo I playable. Use this as a temporary fix until the Wine developers discover the real fix.
Download for Wine 1.6.1: https://www.mediafire.com/?2jicmwsx88nwsv3
Download for Wine 1.7.17: https://www.mediafire.com/?klkfbyyekq36nen
Again, I'm terribly sorry for my noobiness.
Thank you very much for your time of day.
P.S. I have included an image of the script for the possibility of someone maybe circling where I would need to put in the variables ( ie. diablo.exe, gdi, etc.)
With your (1.7.17) patch, the menu shows up but it's always a still of the "previous page", i.e. if I move the cursor it shows a still image with the cursor on the menu entry selected prior to moving it. It also does not manage to draw the "flame" animation or anything, instead it gives me pixel confetti. That wouldn't be too bad (it beats the black screen by a long shot, with some trial&error you can get into the game now) but the game itself also has some issue with this version of wine, the save file gets corrupted frequently [no cheats].
I'll try with older versions of wine next...
I also found Belzebub some kind of HD mod for Diablo 1 - it shows a great deal of potential but it doesn't seem to be quite ready (yet).