I've tried using the default settings and even remapping the keys. No matter what I do I cannot seem to interact with anything in the game. I can run around, jump, swim - just cannot pick anything up or talk to any one.

I am running on Windows XP Professional, using a wireless Microsoft Natural keyboard.

Any idea's?

Taking action with objects can actually be a bit tricky to figure out in Gothic, as it's actually a combination of keys. To activate an object or talk to a person press the action key (e.g. left mouse button), then while the action key is held down press the up key (or w, if you have the direction keys mapped to wasd).

Which is why I programed my keyboard to combine control + up-arrow and control + down-arrow as single keystrokes (G3 and G4 respectively) - so much easier!