TO move during combat, you need to use the 'move' key. Its down there on the bottom, somewhere [OK, I forget just where. Happy now?
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The graphic in the lower right shows your party formation. Make sure your toughest guys are out front. You click on it, then move the color coded arrows [matches your charactors name color] to where you want 'em. If you move them in combat, they move back as soon as combat ends. Move them when you aren't in combat, and they stay that way.
Oru