Has anyone noticed a bug in Akalabeth 1998 where the player can't use weapons to attack, only "Hands"? It happens to me occasionally under Windows.

It doesn't say "Not Owned!" and continue prompting, as though the weapon weren't there; it just says "Hands" and attacks, as though the key you pressed wasn't associated with any weapon to begin with.

When it happens, I haven't found a way to fix it short of quitting the game and starting it again until it goes away. Is there a better solution?

I have faced the same problem. Windows version, downloadable directly from GOG’s Akalabeth page have this problem.
But if you use the « Install with GOG » procedure, the bug disappear !

I know this is an old thread, but I've also had this issue. I'm not sure what triggers it, but exiting the dungeon seemed to fix it, although it might be necessary to go back to a town first. I'll try to figure out how to trigger the bug, then verify what you can do to get weapons working again.

When I tried to play this game many years ago, it was too brutal and I quickly put it aside. But I'm actually enjoying it a lot now that I've given it another go!

Okay, it happened again and I think I figured out what triggers it. Apparently it happens if you hit the CAPS LOCK key.

Also, I must have been wrong that it can be "fixed" by exiting the dungeon or visiting the town or castle again. It seems that the only way to fix it is to save the game (Q), then close it and open it again.