Monk1231: Total noob to these old school M&M games. I'm playing World of Xeen and I venture out into the wilderness. Some monsters I clean up in a few hits, and then monsters like the Wizard or Orc Grunts and Shaman just annihilate my party and the game is over.
1. How do I beat these foes at the start of the game?
2. How am I supposed to know which enemies I can defeat, and which are too much for my low level party?
It's been a long time since I played, but the main thing to remember is that the game is completely open, so you can wander wherever you want, but some areas will have enemies that are too tough for you. If you travel too far from Vertigo, you'll run into monsters that you can't handle.
At the start, make sure you thoroughly explore Vertigo itself before you venture outside. Remember that as your party gains experience, you need to visit the training grounds in order to actually level them up. Make sure to do this, because higher levels help a lot when facing tougher enemies. And try to get some ranged weapons for your party. This helps a lot, because you can take potshots at distant enemies while they creep closer to you, and by the time they reach you they can be finished off easily.
Once you venture outside the town, you can try to take out the orc huts if you can, since that will stop the orcs from spawning. But if they're giving you trouble then the Red Dwarf Mines should be your next stop. There's a tent outside the town where an herbalist offers a quest to fetch some herbs, but that's too tough to try until you have gained some levels. Exploring the Red Dwarf Mines will earn you a lot of experience, gold and treasure, which you'll need before you start exploring the rest of the world. You will probably need to make many trips back and forth between the Red Dwarf Mines and Vertigo so you can heal up and train for levels. Donating money to the temple (you may have to do it several times?) can get you some nice blessings, but be sure to save some money for training too.
Hopefully that helps, others here may have clearer memories of the starting area and more specific advice. Good luck, it's a really fun game once you get into the swing of things!
EDIT: I forgot to mention: there's a pyramid outside of Vertigo that will transport you to Darkside, but that's not recommended yet. Darkside is designed to be played after you've finished Clouds of Xeen, and if you head to Darkside early then you'll earn huge amounts of experience that will make the rest of Clouds trivial and boring. Just stick to Vertigo and the Red Dwarf Mines (with maybe a stop over at the orc huts once you think you're ready for them) and that should get you going.