What quests should I have completed before moving on to chapter 3 (and what quest ends chapter 2)?

I am currently in the Windspur hills, after Firkagg (??). I have a full party of 6, with levels between 9 and 11, is that about right to carry on to the later chapters?

- also, is there a BG2 patch, and is it worth installing?

Collecting and forking over the money for Gaelan Bayle (or the 'mysterious contact' in the graveyard) is what initiates chapter three. You don't have to complete everything possible in chapter two. You can come back to any sidequest you didn't do later on in the game.