Out of curiosity, have you used the chance to get some free equipment for your characters, or I should rather ask, what weapons are you yielding and what armour do you wear?
How do you attempt to handle the fight (strategy wise)?

Thanks for the reply.

Yes, I got the free equipment. I didn't change the weapons much, as I was a bit intimidated by the selection and it looked like everyone was using stuff that fit with their skills. I did give the druid a quarterstaff to use instead of his obsidian dagger, and I upgraded the elf with a crossbow that I found in the first level of the dungeon.

For armor I bought boots for everyone, plus leather head and arm armor for those who could use it. I bought chest armor for the 2 or so members who did not come pre-equipped with any.

I'm pretty stumped how to approach the fight honestly, and the lack of ability to land blows with level 1 characters saps my patience such that I usually just switch to computer fighting mode at some point (and even that takes forever to play out!). Most recently I tried lining up my 3 magic users along the nearest exit and my 3 melee members two spaces ahead; it didn't seem to make much difference.

One of the most frustrating things is that even if I surround an enemy on 4 sides, it still takes forever to kill him. Even worse, if I don't surround an enemy on all sides, he'll usually run away when low on hit points. I can see now why many RPGs start you off fighting silly things like rats and bats, as it's much more satisfying being able to kill things early on without the tedium of combat with near-equal opponents who parry half the time.

Are your hits failing, or being blocked (colour indicator)?
If they are blocked, keep in mind that both you and your enemies can only parry once each turn, meaning that you should always try to hit one enemy with at least two of your own characters (and wherever you can, let the weaker one hit first).
Are you attacking aggressive, careful, or neutral?
If you can afford it, aggressive attacks are the way to go. I won't lie to you, fighting in RoA is going to be tedious and will inevitably take some time, even if your group is the far superior, but there are some 'short cuts'. First of all, use your missile weapons whenever and wherever you can. And when you're facing real trouble (or are in a real hurry), magic can often be the perfect choice. Talimee can render an opponent unable to attack or parry for three turns with her lightning spell and her fulminictus sure leaves a dent. Whenever you're too slow, her acceleratus can help as well.
Tamion's evil eye is a scary vision for your enemies, as they are forced into fighting their former friends and thus can speed up your success quite a bit.
Yarano can try all, lightning, fulminictus, ignifaxus, paralyze, magic armour, ...
But one thing you're going to find out sooner than later, computer assisted combat is... rather worthless. The AI isn't very intelligent and is bound to take some very suboptimal strategies. That actually still grants you experience, you simply lack a bit of loot. There are even whole spells focused solely on getting your opponent to flee from the battle (RoA is a lot less bloodthirsty there than the average game, even your own characters can go unconscious instead of plain out death ;)). I just mention that this is a viable alternative, but I often tend to hunt down my prey as well *grins evil*

Edit:
Since I got a bit curious, I started to look around and would like to add a few points to what I said previously.

First of all, in a different thread you wrote, 'I feel that I'm not likely to fare better than the computer at building and growing my party (...) in novice mode'.
Now I do not claim to have any insight on the source code, but there are claims that fights are 'easier' in novice mode. Despite this little bonus, I have a feeling that (most unfortunately) the novice mode is more tricky to play, since according to some reports, the computer doesn't specialise, which would be somewhat important (even more so in combat!). If the algorithm follows the same pattern as it does in the original pen and paper DSA (3) rule-set, you're simply throwing a 20 sided dice, where 20 is automatic [critical] failure (seems to be implemented as there's a blue colour on attacks) and any number below your AT value indicates success. This would mean a maximum chance of 95% and this value is definitely reachable near the end of the game.
A fighter with 13 IN/AG/ST advancing five levels without failure and wearing a magical item with ST+5 would end up with a base AT value of 10. If the fighter has the correct entity, the sword value (again without failure) would be at 12, which means you could distribute 9 points on AT and 3 on PA and have a total of 19 AT/ 13 PA (actually you can even get magically enhanced swords giving you another bonus, so you'd end up with 19/17 as maximum values), which should equal 95% chance of success (on the test, not talking about your opponents parry).
You won't reach these values with the predefined party on novice mode though (and I don't know the consequences of a value of 20, or actually of 19 in aggressive attack mode).

Since you wondered about your pre-made characters' skill profiencies and I've got the game open anyway, I'm going to include a brief overview here ;)

Arbosh: Axes and Cutting Weapons, Danger Sense and Perception, Locks, Self Control, Evaluate. This makes him a good leader in dungeons and a decent fighter.

Rhenaya: Swords (and two handed, though these are going to have a lesser chance to hit, so if you've already got trouble there...), Self Control. Basically, she's your main fighter.

Hjaldis: Axes and Cutting weapons, Self control. A decent fighter.

Talimee: Pointed Weapons, Swords and especially Missile Weapons, everything nature related, Danger Sense and Perception. She should lead your party in the wilderness and use her bow together with magic (important combat spells described earlier).

Tamion: Pole Arms, might use throwing weapons as well, everything nature related, Danger Sense and Perception. A viable alternative to Talimee for leading the party in the wilderness. Either of the two should collect herbs and the other food while camping. Both can take decent care of wounds either through magic or talents.

Yarano: Pole Arms and maybe a possibility to throw something here as well, Alchemy. When there's a poison to be mixed, he's your man, not to mention the enormous potential when it comes to combat related magic.

I'd use either Yarano or Hjaldis as leader inside cities. Neither is really well suited for the task, but they are the best you can muster. Hjaldis might score well with men due to her charm and her talent to seduce, but Yarano knows his way around the city a bit better.

I hope that might have been of help.

I'll have to go back and check. Almost always aggressive. I've generally been trying to do this, but I've found it a bit frustrating because you can only shoot/cast in straight lines and not through allies. This really limits my ability to focus attacks. Also, astral points are of course in short supply at the start of the game. That's good to know.

Actually, I wonder if maybe defeating one or two enemies in an encounter and then running away myself might be a good idea. At this point in the game I don't think it's going to make much difference. I'm currently liking advanced mode better because the game is not very helpful in novice mode, so novice mode effectively just hides useful stats.

The nice thing is that you can start the game in either mode and then load any saved game, so it's easy to switch modes at any time. Thanks. This mostly tracks with what I was able to figure out on my own already, although I didn't know it was so important to change leaders for different situations. I should mention that every single time I've tried to use the heal wounds talent, it's only made things worse. It seems to be useless at the start of the game. Does the wand count as a pole arm? I'm using it as my light source in dungeons, so I'd rather not have to swap it out with something else during combat in order for him to be effective at poking enemies.

For tough fights, never let the computer control. Yarano is your most important character. Make sure his AP is at max for this fight. Move him in front of an enemy, but protect his sides and back with the fighters. Have him cast Domination-Horriphobous on the enemy, it should hit and scare the enemy off. Have Tamion cast Domination-Evil Eye on an enemy and this enemy will now fight on your side. Have Tamilee cast Combat-Fulmicatous on the another enemy. Continue to have Yarano cast same spell on all the enemies. Even though they flee from the fight due to fear, your party will still get the same experience. Repeat this for the entire battle and you will win.

You cannot win the tough fights in this game without properly using magic. Yarano will be your most important character. Always watch his sides and back during a fight and have him cast this spell over and over.

Good news for you here. In RoA 2 and 3, you can shoot diagonally (and use weapon poison on bolts/arrows). Despite loosing one position for a melee character to hit on, I'd still use an archer, simply because they are very effective and you rarely have enough supremacy on the battlefield that you can afford four of your own heroes for a single enemy. I hope you've got the fourth wand enchantment. That helps you to save a few points here and there ;) But yes, Arcania (Aventurien) is a land where even powerful magicians cast spells sporadically, because it is a drain on the body. If you flee, it seriously hampers your experience gain and that's nothing you want, since it's already in short supply. A nuisance and massive design flaw indeed (one should be able to simply assign tasks to characters and thus save the trouble of reconfiguring manually), but... well, most important automatic tests are only done for the first two in line (e.g. determining if you spot a side trail in the wilderness, which is why you want your nature proficient characters leading there, or you're going to have a tough time finding them). Whom had you try to do this and how? What exactly do you mean with worse? Yes, a magician and his wand are the perfect dream team. You won't ever have to bother replacing this with anything else. There are enemies where this won't work though and it's personal preference.
When I first played through the game, I had never used that spell a single time ;)

The spell just makes the battles much faster and easier. It almost makes the game unbalanced because the spell is so powerful. I'm sure there are some enemies where it might not work, probably skeletons/undead.

I was traveling from Hermit's Lake to Phexcaer and ran into a unicorn. I talked to it and it said that it has a map piece and ran off. I waited but it never returned with the map piece. Do you know how I can get this map piece? Thanks.

Just be patient. You'll meet it later eventually. Find the other map pieces first.

I concur on not ever using computer combat, it is horrible and will get your party wiped. I recommend using spells like paralyze and horriphobus to take guys out instantly while casting ignifaxus rather than fulminictus when dealing damage. Personal experience has led me to believe that ignifaxus is more economical on AP while fulminictus eats it all up since each point of damage done by fulminictus reduces your ap.

Dont forget that your melee characters can hold up any melee opponent if they attack it, making it an easier target for your ranged.

The choice depends on your opponent ;)
*coughs* demonic creatures *coughs*