I agree with the controls. It's been many years since I played Gothic, but the controls were horrible. HOWEVER, I was able to get passed it and it became one of my most favorite games ever.

If someone uses his brain and actually tries to go to options to redefine controls, then they are absolutely ok. And it is possible to redefine it to WSADEQ+SPACE+TAB plus few other keys + MOUSE. It plays very well after this.
The only worse thing is inventory and buy/sell interface, but it is still usable (and they improved it a LOT in G2).
I never encountered any bug.
Dialogue is good, but its no Planescape (but then again, no game is).It is definitely good enough though, and this game is not that much about dialogues anyway.

I dislike the controls too, but the dialogues are ok.

Play on and you'll find that the controls will become easier. And as for the dialogue, well, honestly it's not exactly Oscar-materiel, but it's not without humor either.

To me, after sometime the controls not only make sense but the combat becomes more like a "fight" than any other game, relying heavily on your hand skill to defend and counter-attack. Particularly important later in the game, against the orcs!

I agree about it feeling more like a "fight", relying on your hand skill. This is why, as more of an action game than most PC RPG's, this one is great for the gamepad. I've played both Gothic 1 and 2 with both the keyboard and the gamepad, and man the gamepad is heaven for this game.