What would be a good choice for a Ranger's Favored Enemy in IWD2?

I'm considering Trolls, Yuan Ti, or even Goblins (for the HoF version).

TIA

For IWD/HOW it would be Undeads. But in IWD2 i choose Goblins/Orks due to role playing reasons, cause chances of encountering different races are more or less equal. Nevertheless Yuan Ti might be a good choice.

Another reason to take orcs (at least for a first racial enemy) is that by the time you get to yuan-ti, a ranger (unless mc'd to an arcane caster) generally has a good enough BAB. The +5 essentially doubles the ranger's BAB against orcs in the early game. If you take enough ranger levels, yuan-ti would be a decent. Orcs and gobs aren't bad for HoF choices because the party will be at a lower level than later on, thus perhaps gaining more benefit (proportionally) than against a racial enemy that shows up later in the game.

I often take trolls in IWD2.

I wouldn't agonize over the racial enemy as it pertains to HoF mode. Chances are you'll depend more on summons, enchantments, evocation bombardments, and instant-kill spells than warrior abilities.

I'm considering taking 3 Ranger levels at most.

Right now my characters is a Deep Gnome:
Fighter4/Rogue3/Paladin3/Illusionist6

I need to balance if I'd rather have this guy be the following at the end of HoF:
Ftr4/Rog3/Pal3/Rng3/Ill17

or

Ftr4/Rog3/Pal3/Ill20

I'm leaning towards the extra Illusionist levels, because I think I'll have enough HP and BAB.

You must maximize your spellcasting potential. 3 Rgr levels gives you dual-wielding, a slight bump of BAB and HP, a single racial enemy, and skill access that isn't really necessary. The difference in spellcasting ability (e.g. more slots for higher level spells) between caster lvl 17 and 20 is much more significant.

I agree, Aerich. If I were starting over from the beginning, I might think differently, but it's a little late in my game to be adding 3 Ranger levels, I think.

I actually have this character right where I want him, and he's going to squat until the beginning of HoF mode.

He's at Ftr4/Rog3/Pal3/Ill6 (I was going to leave him at Ill5, but Ill 6 was the 16th level, and I wanted to boost his DEX 1 point).

His spellcasting isn't really my main focus on him, because I've never boosted his INT over the 18 he started with (unless I find a good item for him that boosts INT, I might need to boost it once to cast level 9 spells though). I use his spell slots on things that will boost his fighting prowess, like Bull's Strength, Cat's Grace, and Mirror Image.