normalized sum of squared differences
In an attempt to solve the question on why to normalize, and implicitly how to normalize:

$F$ is your reference patch, $I$ is the patch under inspection.

So make $I$ only consist of the maximum possible value in your image format. Then, your $SSD$ becomes very large, although $I$ isn't "similar" to $F$ at all.

Now, for comparison, set $I=F$. In theory, this should give a large (if making any sense at all, the largest) $SSD$ possible, right?

So, obviously, your $SSD$ formula as is isn't useful at all for comparing things, because an $I$ with a high average amplitude will just come out as a "winner", always. So, you need to get the energy of the $I$ out of your formula first. That's easy: Just divide $I$ by the sum of the squares of all its values.