I played a little more today. I mainly worked on increasing some skills like throwing (by playing darts at the thieves guild) and climbing (trying to get over the town wall at night). The only modern game I can think to compare the skill progression system to is Oblivion; keep practicing the skill and it will slowly increase. You don't 'pop' actual character levels like alot of traditional rpg's.
Next I collected what spells I could from the magic shop, the hermit and the meeps. I tried a little combat with a few goblins. I forgot how difficult early combat is in Quest for Glory. I almost kicked the bucket and had to 'escape' a few times. Although simple the fighting system is not bad for it's time. Just dodge and attack with the directional keys and use the text input interface to drink potions, throw daggers, cast spells etc.