Update: If the Gibberlings3 site is down the files can be found here: http://www.camagna.net/g3mirror/g3_emergency_mirror.html
Update: BGT or EasyTutu? Please see the bottom of this post.

This post is to help people get the best vanilla experience. I didn't include anything that adds a lot of new content since I believe your first playthrough should resemble as closely to the original as possible. If you're wondering about Unfinished Business, you're free to skip it; it is absolutely non-essential.

Note: If you're on Windows 7 you might want to install the games in a directory other than C:\Program Files or C:\Program Files (x86) to avoid potential problems. C:\Games should work.

Part 1
You probably know that you can play the original Baldur's Gate content using the much improved Baldur's Gate 2 engine. The first part of this guide is to help you combine the two into essentially one huge game. If you are only playing Baldur's Gate 2 please proceed to the second part of this guide.

1. Fully install Baldur's Gate: The Original Saga
2. Fully install Baldur's Gate II Complete. If you're installing from CD, make sure you update it to version 26498.
3. Download Baldur's Gate II Fixpack (Download links are on the left side) and extract it to your Baldur's Gate II directory.
4. Run the newly extracted setup-bg2fixpack.exe (if not automatically started).
5. It is safe to select yes for all the optional fixes, but if you want to learn about each in detail, consult the readme file that comes with the fixpack.
6. Download BGT-WeiDU and extract it in your Baldur's Gate II directory.
7. Run the newly extracted Setup-BGT.exe and follow the instructions. You may need to run it in administrative mode in Windows Vista/7.
8. Enter Baldur's Gate I's directory when asked (if not already provided)
9. Wait for BGT-WeiDU to finish installing.
10. OPTIONAL: Download and install Baldur's Gate 1 Unfinished Business as well as BG 2 Unfinished Business. These mods restore things that were previously cut from the released product, so while you don't need them, and they do add new content, they're pretty nice to have, especially if this is not your first time.
11. Download the widescreen mod and apply it in the same manner as the fixpack. This makes it possible to play the game in high resolutions and in widescreen format.
12. OPTIONAL: Download and install any user-created material (banter packs, expansion mods, new NPCs, etc.)
13. Go to your Baldur's Gate II directory, then find and run the file Setup-BGTMusic.exe and select 'Hybrid Baldur’s Gate/Shadows of Amn/Throne of Bhaal music'. This makes it possible to hear the original Baldur's Gate music when playing Baldur's Gate I.
14. OPTIONAL: (for more experienced users) Download Baldur's Gate II Tweak Pack and apply it in the same way as the fixpack. Consult the readme file for details of each tweak - too many to list here. If you don't know what a tweak does even after consulting the readme, just skip it.
15. Remove the Baldur's Gate I installation if you wish - it's done its job!

Now you should be able to play the game all the way from Baldur's Gate I to the end of Throne of Bhaal in one continuous game!

To begin your journey:
There should be 3 buttons that greet you on the first menu screen - "Baldur's Gate", "Throne of Bhaal", and "Quit Game".
Click on "Baldur's Gate".
Then click on "Single Player".
The menu that comes up after will have "New Game", "Load Game", "Back", and "New BG2 Game".
Click on "New Game" to start from Baldur's Gate 1 or "New BG2 Game" to start from Baldur's Gate 2.

Enjoy!

Part 2
For people who only wishes to play Baldur's Gate II.

1. Install Baldur's Gate II
2. Download Baldur's Gate II Fixpack (Download links are on the left side) and extract it to your Baldur's Gate II directory.
3. Run the newly extracted setup-bg2fixpack.exe (if not automatically started).
4. It is safe to select yes for all the optional fixes, but if you want to learn about each in detail, consult the readme file that comes with the fixpack.
5. OPTIONAL: Download and install BG 2 Unfinished Business. This mod restores things that were previously cut from the released product, so while you don't need it, and it does add new content, it's pretty nice to have, especially if this is not your first time playing.
6. Download the widescreen mod and apply it in the same manner as the fixpack. This makes it possible to play the game in high resolutions and in widescreen format.
7. OPTIONAL: Download and install any user-created material (banter packs, expansion mods, new NPCs, etc.).
8. OPTIONAL: (for more experienced users) Download Baldur's Gate II Tweak Pack and apply it in the same way as the fixpack. Consult the readme file for details of each tweak - too many to list here. If you don't know what a tweak does even after consulting the readme, just skip it.

Enjoy!

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BGT or EasyTutu?
This guide uses the BGT mod, but you may have noticed another mod that exists to utilize the BG2 engine for BG1 - EasyTutu. If you're unclear about their differences, here's what you need to consider:
BGT:
- BG1 is bridged to BG2 via a very short additional scripted scene. However, it's pretty clear at that point that one game has ended and another is about to start.
- The NPCs' stats are carried over to BG2. Whatever level and whatever stats they had at the end of BG1, when (and if) you meet up with them again in BG2, they will still carry those same stats. This is another feature to maintain continuity throughout the 2 games.
- No need to import your character into BG2 after BG1 - BGT does it for you.

EasyTutu
- Only updates BG1 to use the BG2 engine - they're still kept as separate games.
- You must import your saved game from BG1 over to BG2 when you're ready to start a new game.
- BG2 will be unmodified (i.e. the NPCs' stats will be whatever was programmed into the game, any progress they had in BG1 won't be reflected here).

Basically it comes down to whether you want to keep them as completely separate games (or if you just want to play BG1 only) or try to preserve the continuity between the two games. If you are interested in EasyTutu please take a look at this guide by rartino.

Thanks mate, trying that now!

What about a guide for people who only wish to play BG1? Thanks in advance.

What about existing BG1 save games? Can they be run with these mods? Or is this only for starting fresh?

Actually there's this thing called BWP (Big World Project). The name doesn't even do it justice - its simply HUGE.
Try that for a change. Guaranteed to satisfy any style of play you favor.
It doesn't end there though, there is a crapload of content for every infinity game out there(it's a cult you know...)!

Why would anyone want to do that??? :p I think you may have to start from the beginning again. Since you'll be running BG1 in BG2's engine using these mods, I can't say that the saves will be compatible. You can always try if you'd like. BGT-Weidu does not modify your existing BG1 installation.

EDIT: Forgot to mention in my original post that you can remove your BG1 installation after transitioning it to the BG2 engine. Fixed now.

As someone who hasn't played through Baldur's Gate II, should I hold off on Unfinished Business for now until I'm more familiar with the base game?

Also, does the widescreen mod require a GUI fix in the same way Baldur's Gate 1 does?

You don't need a GUI fix for the widescreen mod in BG2.

As for Unfinished Business, it varies from person to person, which is why I have it labeled as optional. On the one hand, it's likely to be cut for a reason, and some of the 'new' content were reconstructed by fans - which may or may not represent the developers' true intentions for the story. On the other hand, it does offer some cool new things, like a character quest for Minsc, and some new items.

Personally, I'd say for a first timer, play it without Unfinished Business. That way you get to experience the story as told by the developers, as well as new things to look forward to once you decide to play again!

I used your whole guide and I was wondering since I am using the widescreen mod to run it at 1680x1050 I can barely read anything and it will possibly make me go blind since it's all so small. Is there a resolution I want to run that is preferable? (1680x1050 is my monitor native) Or is there such a mod to make the text bigger or scale? (and I followed your whole guide not sure if doing this after I did all that would cause problems)

You can reset the resolution if you'd like, just run setup-widescreen.exe again, and choose to reinstall. Try these following resolutions: 1440×900 or 1280x800. The graphics won't be as sharp afterward, but everything should be larger.

Thank you for the guide, just what I needed.

You want BGTutu, which lets you play BG1 in the enhanced BG2 engine. I think there's a thread here somewhere that will tell you how.

Is BGT-WeiDu needed for the BG2 mods listed in "part 2"? I only ask because it wasn't a step for your part 2 guide.

http://www.reddit.com/r/gaming/comments/cebua/step_by_step_moddingguide_turn_baldurs_gate_and/

BGT-WeiDu is NOT needed if you ONLY want to play BG2. BGT is used to play BG1 in the BG2 engine.