DeadYorick: Full disclosure I am playing the game with KeeperFX, not the original DOS version.
Fair warning: I'm unfamiliar with KeeperFX, so I don't know what it has changed.
DeadYorick: Something that's really bothering me about DK1 is whenever I try and get my guys to fight the enemy they don't do anything.
If you drop your creatures next to enemy creatures, then fighting will generally ensue. There are limitations, though.
-If you've set the "Flee" option, then your badly injured creatures will try to leave the fight. If "Flee" is not set (if it is not flashing), then your creatures should fight to the death.
-Only so many creatures can participate in a battle at once, even if they are all ranged. If some creatures are standing there hopping, then they are effectively cheering on the ones that are actually fighting. The 'audience' will start fighting as combatants fall or retreat.
-Imps will pretty much always try to flee combat, except against other imps. Your imps and enemy imps will happily try to kill each other, but (wisely) they will run from anything stronger.
DeadYorick: Like I'll tunnel into an enemy base and then drop all my guys there and they won't do anything they'll instead retreat.
If you just dropped your creatures at the edge of the enemy dungeon, then they'll just try to go home if they don't see any creatures (including imps) to fight. Creatures don't attack the rooms of an enemy dungeon. They will attack enemy doors if they are dropped close enough (an enemy door is any door that isn't under your control).
They will also attack a dungeon heart if you can drop them close enough. Keep in mind that you can drop them at the edges of tiles that you've claimed, which may put them that much closer to the heart.
DeadYorick: Using the flag thing does nothing. It's only when an enemy's attacking them that they'll SUDDENLY decide to fight them. In one mission it took several tries to get the AI to finally convince itself it was worth attacking the enemy.
If you are talking about the Call To Arms spell (which has a flag symbol), then the spell just causes all of your creatures in its radius of effect (charge it up for a greater range) to walk around where the flag is. You'll have to cast the spell to get your creatures to follow it. You can therefore move it toward and through an enemy dungeon to guide all of your creatures toward some location. If they encounter enemy creatures, doors, or the Heart, then they'll attack.
Maintenance on Call To Arms is free if you cast it on tiles you control. It can get expensive quickly once you cast it on tiles you don't control.
Creatures might choose to leave the flag if they get too hurt or hungry. I'm not sure about this aspect of behavior.
DeadYorick: Can someone please explain what mechanic I'm not understanding? I created all of the rooms I thought were necessary and trained up my guys but this keeps happening.
Creating the relevant rooms is what lets you attract those creatures in the first place. For example, you won't get any warlocks through your portal if you don't have a Library.
Training just increases their experience, which leads to higher levels, which leads to higher stats and maybe some extra skills.
Neither having the relevant rooms nor training your creatures makes much difference in how your creatures engage in combat.