Yeah, I figured that out. What I was missing was that you needed a wand or a staff equipped to use magic. Anyway I got to the part with the Dwarf boss, and it is pretty impossible when using magic. I have fire at 6, and Fire Strike at 2. My stats are:
Overall LVL 8
STR 1
VIT 11
INT 12
RES 10
SPD 8
DEX 1
Luck 8
My fire attacks are EXTREMELY weak though. They only hit like 5. I also have a partner(the first guy you meet in the side quest that is required to start the main quest. He is pretty much all my power, but at the boss he dies in less than 10s. Then I try to do magic, but by the time it "loads" the dwarf king hits me making my magic pretty much pointless. Pretty frustrating. I'm thinking of changing class to thief like you said, then boosting my magic.
Edit: Otherwise the game is fun, and the story is pretty neat.
Edit 2: I would also like to mention that most of my time spent in the game so far was running away from enemies. 
They just far outnumber and outluck me. I only kill when there is one around. Unfortunately they accummulate by a LOT when you run away from all of them, and it doesn't seem like the A.I has a "stop chasing" code programmed into it, they will chase you until you kill them or enter another load screen.
