Bear with me, I'm an old fart and haven't played DF in a hundred years. So the problem is simple, I don't know how to pick pockets in this version. I'm crouched, sneaking and have switched to stealing mode. Despite this I still just start a conversation with someone when using the activate button (middle mouse button). Is it another button I have to use or am I forgetting something else?
Please help, I just want to join the Thieve's Guild!

Just tried it myself, in classic DF and in DFU - works in both environments as it should.
The way I do it (being used to the old classic UI myself) is: Activate the classic UI (the icons on the bottom of the screen), approach someone until the person stands still, activate the "steal" icon, click on the person with the left mouse button (you may have to press enter first to be able to move the mouse freely).
Then you get a message, "successful" or not, in the second case the guards arrest you when you are in town.

Bear in mind that there are two types of NPCs in the game -- "mobile" NPCs (i.e., civilians walking around outdoors in towns, as well as monsters, town guards and other enemies to be fought or fled) and static, unmoving (though sometimes slightly animated) NPCs. The former mostly appear outdoors and in dungeons (though you won't see mobile guards or civilians in dungeons), while the latter mostly appear in regular businesses, houses and castles in towns or other settlements. Only "mobile" NPCs can be pickpocketed -- regardless of whether or not they are moving at the moment (and yes, this includes things like bats and bears :D ).
(All of this is true in the unmodded base game -- I don't know if any of the above was changed in DU in general, or DUGC in particular.)

Also, I don't know if any of the mods included in the DUGC package made stealth work like in later Bethesda games, but in unmodded Daggerfall, crouching had nothing to do with stealth, other than being a way to move more slowly (and moving slowly = sneaking). When standing still, I don't think crouching affected stealth at all.

Thanks for the reply HunchBluntley. I only tried to steal from NPCs inside buildings. Another Daggerfall mystery solved!

No need for the UI just to change modes. You can just press F1 to F4 to select them. Unless this build has changed the control layout, then you would need to check the keybindings.

The pickpocket/steal mode can be enabled with the F1 key. The icon will change accordingly.

There is a mod not included in the GOG CUT pack that makes the game change the interaction mode dynamcally depending the context. Maybe it is not the cup of tea for everybody because it changes things too much interface wise, but when I tried it it worked fine.

https://www.nexusmods.com/daggerfallunity/mods/285

Just remember to switch back to dialog mode before you try to talk to someone! LOL.. The amount of times I'm getting arrested in Daggerfall either by accident or due to some nefarious NPC is hilarious...

Indeed. It happened me also for doors. The guards appear at light speed and they do not want to hear my explanation, Ey it just was an interface oversight :D

That was one of the few good things about using the full-UI mode (the one with the buttons covering the bottom 40% of the screen) -- at least you could see at a glance which interaction mode you were currently in.

Anyone know if Unity has any option (or mod) that puts an interaction mode icon on-screen in "normal" full-screen view (i.e., minimal UI) mode? That would really be the best of both worlds.

Yup, you can set that in the options when you launch the game.

Well, I can't, as I doubt my eight-and-a-half-year-old laptop with half a gig of VRAM and 4 GB of "general" RAM would run Daggerfall Unity particularly well, even without further mods. ;P But that's good to know.

You can have the interaction icons in the fullscreen mode, indeed, It even gves you choices to select, classic icons, big icons, new icons etc...

About your laptop you could run Daggerfall Unity but probably being selective with the mods you have enabled at once specially the more demanding ones like distant terrain or the interesting eroded terrain, the improved sky...
About the new textures well, the mod comes in individual different parts, it is modular, you can enable or disable different sets of graphics to make an idea about the performance.

I have noticed that the GOG cut comes with some effects enabled by default and things like vignette, HDR, occlussion... etc can be struggling for the videocard if it is old. Press escape and when in the options menu look at the upper left part of the screen. You will see a little button where you can change graphical effects and some mod settings, also the retro mode. It is something present in newest versons of Daggerfall Unity and can be easily oversighted

I suspect it would run Daggerfall Unity fine.

GoG Cut with its graphics mods etc? Maybe not.

There is an icon at the bottom next to your health/stamina/mana that is always present letting you know which mode it's in. I just forget to look. hah