You are in the Lady's city, berk, and some addlecove running around penning a lot of people in the dead book early has a good chance to meet her beneath her shadow, if you're still with me. That and some of the Evil options on how to treat people are... Jesus, I wanted to try it out once, but I just couldn't. Early on, I was presented with a choice that would have allowed me to emotionally abuse someone who was a textbook battered wife who had a history with me to find a way out of the building; had to resist the urge to throw up when I read that line of dialogue, and the thought that there would be more soul-crushing stuff like this on the Evil path made me revert back to being nice.

That aside, killing everyone is just impractical, as it kills off quest givers, and quests provide the most experience by far in Sigil. Also, some people can't be killed without derailing the plot, usually causing a game over or making it much harder for you to find out what to do next.

I've managed to be Neutral Evil once but never finished that playthrough. Generally be as manipulative as you can in conversations. Cheat people, use them to your own devices, exploit your companions. There is no need to be psychotic killer to be evil. Words can do far more damage than killing. If you devote enough time to companions like Dak'kon, you can pretty much learn how to behave in order to be of evil alignment. Lawful Evil seems to be hard. I managed to be Lawful Neutral for a while on my latest playthrough - I finished it not half an hour ago - but messed it up with 'Pharod's Bodies' quest and reverted to True Neutral.

This was actually the first time I finished the game. Yep! Had it since 1999 and just finished it now. Tried many times. Something would always happen and stop me - lost saves etc. And I feel the urge to start again because I know I missed a lot of stuff even though I was very meticulous while going through it.

Finished the game too, was Neutral Good till the end, it seems =)

Lawful evil is the toughest path (always vow the evilest option and don't break them) to take and not any advantages. Because you usually end up slaughtering NPCs, thus botching quests and losing XP.
chaotic evil is much much easier and probably the most enjoyable.

The only evil character I played ended up being lawful evil. I wasn't particularly trying for the alignment, but it just naturally flowed from my character's personality.

He wasn't too evil, though. Just a bit south of neutral. He followed his own code of "honour" and was fairly trustworthy as long as you didn't cross him, but was utterly ruthless and didn't give a rat's arse about helping anybody else. Don't recall making too many vows either, though obviously this guy never lied nor ever broke his word.

Still, I get Jonesy's reaction to some of the evil options in this game and this character couldn't take them either. Torment's the only RPG I know where some evil options are just too evil to stomach. (as opposed to "too stupidly, brainlessly thuggish to stomach." I'm looking at you, Knights of the Old Republic.)

As for Dak'kon: his sword is shaped by his thoughts, so if he's tormented enough he'll deal a -lot- of damage. If you win his trust he'll get more magic power and more defensive powers instead. The latter is better, gameplay wise, but the former can also benefit you.

If you resolve his arc, he gets better, but if the sword changes when he has great morale, the results are mechanically underwhelming. He loses a +3 bonus to AC in exchange for an extra 3rd level spell slot; don't get me wrong, extra spell slot is nice, and it's even nicer if you also help him resolve his crisis of faith, but as far as changes to the sword alone goes, it's not much of an improvement.
Sounds a lot like a character I rolled up for a stalled PF game. Characters like that can be fun to play, especially considering some of the boneheaded preconceptions people have about Evil-aligned characters.

One thing I managed to do on an "evil" runthrough, was there was this NPC who gave me the hiccups. Jumble, I think his name was,

Anyway my character got quite annoyed with that, and told him to cut that shit out and cure him - to absolutely no avail. Seeing no other option, Jumble had to die.

The hiccups continued for several of actual hours, before I finally caved and actually restarted the game. Fucking Jumnble! The piece of shit.

If u start killing random people the Lady will kill you, so don't.

The benefit of Evil is some extra items (a summon-thing and a couple of weapons), the price is the loss of 2 stat-artifact (you can balance one in starting lawful-good, and than start doing evil). All-in-all evil is for warriors, good is for mages, and generally just avoid thieves unless you wish to abuse invisibility.

For companion-sake they'll not leave you. Only ast the Fortress of Regrets you'll get a nasty surprise if you have the living armor-guy (also give a cut-scene), but you won't have to deal with Ignus.