Before going any further, there are potential SPOILERS in my post. Proceed with caution.

So I get to the final battle against Sarevok and his 3 lieutenants and Sarevok happens to be the first to die. The text window announces his death, pauses, tells me that a final save file has been created that I may import into BG2 and then goes right into a cutscene.

Why didn't I get to finish the battle? Is that what is supposed to happen in the original version of the game? This makes no sense to me and my OCD will not let it end here. I have to kill the entire party. Luckily I have another file which is a double blessing as I can't play any of the TotSC content. I had planned to finish vanilla before doing any of the expansion but they've made it all 1 game.

Anyways, I took nothing from the cutscene other than Sarevok died. I have seen the beginning of BG2 and have no idea how the ending of BG1 leads me to where you start the game. I guess TotSC will explain? I don't want spoilers but I dont understand how I go from killing Sarevok to being locked in a cage in some random place.

When you kill Sarevok, that is what is referred to as 'Game Over'. There is no more story to tell in BG1. The End. Fin.

There is no written explanation of how or why you got to where you start in BG2, purely because BG2 is a completely standalone game. If there was detailed explanation, people who have never played BG1 would be utterly confused.

That happens in the original too. If you really feel you need to kill the entire party, you need to take them out before killing Sarevok.

As to why they would just throw down their weapons when Sarevok dies, well...their leader is dead. What point is there to keep fighting? Their commander is dead, which means the Iron Throne is no more. Tazok, Semaj, and Angelo were charged with shattering Baldur's Gate's infrastructure so the Dukes would put Sarevok in charge out of desperation. They can't do anything on their own.

If they do defeat your party, what would they do?

"Oh, hey guys! I'm Angelo, the crooked cop. If you can pretend I'm Sarevok until the end of time, that would be great".
No, that's not going to happen!

Sarevok's plan was to become Bhaal via megdeath. If you don't think that's an actual word, look it up. Semaj, Tazok, and Angelo aren't children of Bhaal so they would have absolutely nothing to look forward to.

Tales of the Sword Coast doesn't explain anything in the main story. It explains Durlag's main story, but that's probably not what you meant.

There's a big gap between the two games - but you don't get a lot info on that. There are some clues as to what the NPCs did, which is the best I can come up with.

Hickory is right about explaining the game. I picked up Baldur's Gate 2 before the first one, and I was able to follow it clearly.

Alright. Thanks for the replies gentlemen.

Well, I have played (or am about to play) that modded version of the games that turns 1 and 2 into one seamless game. And what happened to me after I killed Sarevok was that I had to return to Baldur's Gate and talk with the Duke again.

The Duke then informed me that he wants to teleport me to Amn. Because a) people in Baldur's Gate were a bit afraid of me because I'm a spawn of Bhaal myself, b) the people he sent to Amn never arrived and c) to prevent the war between Amn and Baldur's Gate Sarevok wanted to start. You're supposed to meet diplomats there and tell them about how Sarevok was behind all that and that Baldur's Gate isn't interested in a war.

But! Then something goes wrong and when you're teleported by the Duke, you end up where you end up in the beginning of BG2...

Complementing to jsidhu762's answer, in that time gap, you are supposedly be able to kill Tazok; an optional sidequest in the second part reveal that, though probably is assumed you kill Sarevok's party.

And after some months later after your victory, your heritage is discovered.

I prefer the BG1 game over style ending. I don't when a game is too "open" so after you kill the biggest baddest boss in the game you then just walk around picking off bandits and other trivial tasks.

Beamdog is making an expansion right now that will probably change that. One can hope, anyway.

It sounds like it'll revolve around the BG:DA2 story.

Ohhhh one can only hope! I will look into this alleged Beamdog expansion. That would be great. So far I've got all the Beamdog editions. I'm hoping they do Icewind Dale 2. And you know what? Let's get Planescape: Torment and both Fallout 1, 2.

I'm hoping Beamdog lowers the prices more than anything. I can't get excited paying $20 (or even the discounts offered previously) for each game again when I already own the originals and the added content doesn't seem to justify the cost.

I totally agree with you on the pricing. I also own all the original versions of these games and I have the EEs because of discounts only.