The manual implies that non-human characters are limited in the levels they can attain. If so, what are those limits?

Racial level limits is something that was part of the 2nd edition AD&D rules (someone correct me if I'm wrong). I don't think this was implemented in IWD.

Supposedly IWD is partially converted to 3rd Edition D and D rules. There are no racial limits in 3E. As far as I know. I helped playtest those rules so I should know. I have seen only limits in IWD related to classes not race. For instance the druids are limited to 15th level I believe.

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http://home.online.no/~tobak/bloodshadows/crest.gif

Druids go up to 30th, like everyone else. But they do take 750,000 xp to get through one level (13 or 14, can't recall exactly which one). Well, that's with HoW anyway, it revamps their xp chart.

As for the racial level caps, hehe, that's something most every GM I've ever played with threw out anyway.