How should I direct readers to a reference work that is riddled with errors?
Citing the original sources (as suggested in Comments by @MorganRodgers and @SolarMike) would generally be preferable even if the flawed book were perfect. By doing so, you credit the discoverers directly and give a sense of the timeline of various advances in the field.

However, I think it would be a mistake for you to ignore the flawed book entirely. It may be of some use to your readers in spite of its errors. Also, you wouldn't want to appear to be ignorant of the existence of that book.

As the occasion arises to point to the work of others, credit the original sources. However, if the original sources may be difficult to obtain, you could also mention the later book (along with a brief comment in
passing about any mistakes on the specific topic under discussion).
You might also mention the later book if it has any value added:
translations from other languages, explanatory figures, discussions
of connections with other results, historical perspectives, and so on).

If the later book is in your bibliography and you mention it a few
times, you have at least given it due credit and shown you are aware of its existence. If you gently point out
a couple of specific relevant errors, your alert readers will get the idea that
the book has some flaws.  

It is always best to point out errors in gentle, non-judgmental, matter-or-fact language. In spite of your best efforts and those of referees and editors, your own paper will likely have some mistakes. You will see some of them immediately upon publication, even though they stealthily avoided earlier detection.