I am thinking of putting a few points into endurance as it states on the manual that it enhances protection and poison resistance. However, some other places say it enhances defense yet defense doesnt go up when I place a stat in it.

Can anyone confirm just what endurance does with regards to defense? And what is protection?

No, in order to increase Defense, you have to spend points on Dexterity.
Endurance increases your various resistances (magical, fire, poison...) and total armor rating.

See here: pctalk.info/Games/Sacred2/Wolfes.Lair/SacredUnderworld/Pages/GameBasics-Attributes.html

Usually the best is to spend all (nearly all points) in Mental or Physical Regeneration (depends whether you are using combat arts or spells), because this shortens the important cast times and the other effects are to low compared to this, especially because things like defense or resistances can be raised better with equipment.