So far I have enjoyed this game immensely. Sometimes, the difficulty can get a bit hairy, but that's OK, it forces you to play better and smarter, which is really unusual in single-player gameplay. But then came Mulandir... WTF!? Those damn Medusa things take the difficulty from zero to over 9000 (yeah, I went there) followed by insta death after insta death. It got so bad I'm ashamed to admit that I made the mistake of resorting to trying the god mode cheat code. Crap! Now those damn gargoyles never stop coming since the Medusa never stops attacking and my character can't even get a hit in but never dies! AAAARRRRRGHHH! I have never had a game make me want to throw my mouse and keyboard across the room like this one is doing right now!

Yeah, it can be a bit frustrating, with all the sneaking around and whatnot.
With a decent char it's possible to engage, but you still have to use a few 'tricks'.
Maybe level up a bit more and return to it then ?

I'd love to do that, but there is nothing left for me to do outside of Mulandir and my character is at lvl 20 right now, so even if I could find something to do, it would take a hell of a lot to increase his level any significant amount.
The best strategy I have come up with so far, and its really only a partial strategy, is to park my character and four of the heroes right next to a couple gargoyles, then send my fifth hero off to find a Medusa somewhere else on the map. When he encounters the Medusa, the gargoyles activate, my small group takes them down and the Medusa never comes near the group. Once the fifth hero is dead (it doesn't take very long) and the gargoyles are out of commission, I can regenerate that fifth hero and set up to do it all over again. All I'm really doing is limiting the scale of holy hell that will rain down on my character a tiny bit while not actually progressing through the level in any significant way. I still don't know how I'm going to deal with the Medusas and I know I eventually will have to.

You did Farlorn's Hope already ?

???
Don't I have to go through Mulandir to get there? AFAIK, the gate in Greyfell is still blocked.
I did find that I hadn't actually finished one of the sub-quests, but at most it might get my character up one level by the time I'm done with it (the Tricksters quest).

I'm just relying on memory here, and it's been a while, but i'm under the impression i moved through Mulandir without enganging the Medusas (basically killing everything that i could but sneaking by the Medusas), moved to Farlorn's Hope - which i think opened up the way to complete a few sidequests, and then returned to Mulandir later.
But like i said, it's bee a while and i'm a bit fuzzy on the details.

Not as fuzzy as you thought. I managed to sneak my way through Mulandir (its much easier to do when you actually go in the right direction to get the Farlorn gate) without encountering any of the Medusa and actually got the last component I needed to complete the Earthblade quest. Of course, after I got into Farlorn, I screwed up that quest completely by stationing my army right where the Briarwolves Elite were coming through.... dammit! I didn't save the game! Now I need to start that whole area over again! Ah well, at least that one is fun.

eh, eh, well, look at the bright side, no freaking Medusas or Gargoyles on that map ;)

just wait until you start up the next campaign and get to a map called the Firefangs. the exact same level of frustration, if not more. i actually have put the game down for a while, for it's own safety and my own sanity.

Sanity you say :),
hmmz , am i sain if i spent about 2hours killing of all the medusas and gargoyles?

Yep, Mulandir is very hard. Best tactic is to time your movement to avoid the Medusas and then move to Farlorn's Hope. It's somewhere north west iirc

I just burned them :)
one of my party heroes could cast a fireball.
So i swarmed a single gargoyle with my party (who all got killed except my avatar)
I healed them as long as possible. They keep burning while in stoneform which allowed me to slay them all :)

you can actually gain 1.5 levels killing them all.
it takes time but it granted me extra power for the more difficult levels that followed.

the best level for me was the rift.
on hard it's quite the challenge

Hehe yeah. I usually don't kill them all but a few because it's fun and challenging especially if you are trying to kill a medusa and a few gargoyles without even having one hero dying. :)