I took a look around the forum and while there were a few threads with the Slasher quest issue, none are the same as mine. Going into the area where the orcs are, I can see on the mini map that they are all red (ie. hostile). When I make an appearance, all of them orcs started attacking me and while the leader did start to talk to me, no matter what options I choose and I ended up having the get Slasher back quest, the instant I closed the chat, all of them start to attack me again. I tried reloading and reloading but to no avail. Is this a bug? I have never killed any orc thus far but the warrior guy outside the gate did kill some. Else, this is my first actual orc encounter.

This bug was fixed in official game patch v1.33 (1.0033A). 1.34 have this fixed also. Downloaded version of the game (1.005A), however, does not contain the fixes introduced by official game patches 1.33 and 1.34.
Solution: install the RETAIL (CD) version of the game, update it to latest version using official patch v1.34 and all should be fine.

Yes, this is a bug; someone else had a problem with these orcs not too long ago, though it happens more often with a couple of imps that are suppose to be friendly and a couple orcs near the end of the game. There is a fix described in PitBrat's post here, though that method may not work properly for completing the Slasher quest.

If you don't want to manually hex edit the hostile character name(s), Jem in the Steam discussion Imp Council Member created a program to do so.

The following topics contain a bit of info on hex editing, and the character section of the data.000 file.

Teleporting Anywhere, via hex editor

Reviving dead NPCs

For these orcs, when editing the data.000 file, first search for AgentsV to get to the NPC section of the file, and then (in order) Turnak, Bregor, Golg, Vradnir, Grim and Smiruk to edit the first character of each name. After you find the first, they are all together, so you can just scroll down.

If you are not comfortable hex editing, you can zip the data.000 file from your save, in the catacombs before approaching the orcs, and email it to me (raze@larian.com). In Windows Explorer, you can zip a file or folder by right clicking on it/them and selecting 'Send To | Compressed (zipped) Folder'.

Each save is a separate subfolder in the '..\Divine Divinity\savegames' folder.
Under Vista/7, depending on how the user accounts are set up, if you install the game to the default Program Files path, Windows can create separate savegame folders for each user, and then map that folder to the game's savegame folder (so it will just see the saves for the relevant user).
C:\Users\ %account name% \AppData\Local\VirtualStore\Program Files\Divine Divinity\savegames