I have the key in my hand. I switched to combat mode using C, as suggested in a thread I found. I stood near the chest, double clicked it, and nothing happened. What am I doing wrong?

It's been ages since I've played that game, but I would say: exit combat mode, put the key into your backpack, left click on the key and then left click on the chest.

Be outside of combat mode. Have the key and chest visible. Double-click the key to get a target cursor. Click the chest to unlock. It should say "unlocked" in floaty text, if it was the right key. Then double-click the chest to see its contents.

As the previous poster said. Basically, double-clicking an item goes into the "use item" mode, where a cursor appears so that you can click on an item or person in the game world that the item is to be used on. Clicking & dragging merely moves the object, which is Ultima trying to be realistic.

I'll try that, thanks guys