Welcome onto this side of things, Dang! I hope you'll enjoy it...
The start of the game can be frustrating. Your party is brand new, and even those glowflies and roaches are impossible to kill. And they don't fight back!
First things first...
1. Magic works, even at low levels. Your wizards should have the burn spell... use it. Go back into town, come out, and your mana is replenished. Life is great that way. Your priests should also have the heal spell. Use it. Head into town. Repeat.
2. For the fighter types, weapons are a must. Make sure that they're equipped, and do your best. Yeah, it will often seem that they can't even hit the ground. That will get better, so keep on healing them and trying again.
3. You can get sneaky in combat if you want. Watch your opponent, and you can see when he's getting ready to attack. Simply back up when he starts, and when he swings, you'll be out of range. Then run back in, attack, and get ready to back out again. This works best against a single opponent, since multiple can get in the way of your backpedalling.
Bsftcs has already mentioned the Tech Tips thread. I'll wager you're running Win2k or XP, so you don't have the right codecs. Use the virtualdub trick mentioned in there, or get the alternate codecs that Willow mentions in there as well. Either one will let you get through.
Also, check the other XP/2k-related items (compatibility, virtual memory, and so on) to make sure you're not going to run into a problem in the future.
And do come on back with more questions! You see, we really don't have lives, and the only thing that makes us happy is seeing someone else get hooked on this great game...
