Tallima: I set the game to Hardcore rules and it was difficult, but not impossible. Below that, there's Normal (you won't have to worry about friendly fire) and Novice (you'll get better rolls and monsters do 1/2 damage and no friendly fire).
When you're learning the rules, you might want to set it at an easy level. And once you figure out that low AC is good and you've figured out who can use what weapons effectly and what magic spells buff well, then you might raise the difficulty to test your wits and preparedness.
It really is a great game. I played and beat it a year or two ago and I enjoyed every minute of it.
As a side note, if you have a widescreen or high res monitor, you may want to tweak your screen resolution with a tool. I just used it for BG2 (I'm just starting that now) and it made the text all much more readable.
You can download it here:
http://www.gibberlings3.net/downloads/widescreen-v3.04.exe Do note that in vanilla BG1 (aka not TuTu or BGT) lowering the difficulty reduces the experience you earn. Therefore, it's not worth lowering the difficulty at all, because the less experience makes the game harder overall.