mmeewezen: You can try the 69 Wights lurking near the stairway at level 3 of the Catacombs. It's the best grind I have found so far -I am now at Mangars-.
Euroleo: That's a pretty sweet spot. Catacombs (say "Tarjan" to temple guards") coordinates: Level 3 4 N 13 E (10K XP+Gold) - but you can only port to the staircase in level 2 (cast teleport 8 11 -1) when you enter the dungeon. On level 3 there are a quite some large groups of undead (also 53 zombies and 99 skeletons) which you all fry with a single repel undead spell (4 SP) or if you don't have it, yet - a single Dragon Breath should do the job.
Or, of course, you can use a Fire Horn.
At least in classic versions, the Fire Horn will do as much damage as Repel Dead, and it is more likely that you will get a new one than it is that your old one will break. (In other words, on average you'll get a net gain of Fire Horns.) Also, the fight is much faster (one quick breath or spell to get 11k experience instead of a long fight for less than 60k, assuming a 6 character party).
With that said, if you want good items, you will need to look further in the game. At least in classic versions, once you get to the second floor of the castle, from there on you're guaranteed to get one item per battle in addition to the random chance per enemy of getting a second, and by the time you reach Mangar's, you will probably never need to worry about running out of breath attacks (which in BT1 are far stronger than spells) ever again.
(Incidentally, I disagree with the decision to make the berserker encounter not respawn, but for different reasons.)