I did not know that.

Wow, that's some poorly thought-through design. Punishing players who want to play on easy by making the game harder? And they thought that was a good idea... why? [/rhetorical]

Does the extended edition keep this uh.... "feature?"

The manual is wrong. Even the BG2 engine has no XP scaling.

It's not just the manual; the in game GUI for the difficulty slider says the same thing.

To be fair, easy difficulty does make things easier by making you take less damage and deal more damage, and all that other fun stuff. Just not sure the tradeoff is worth it (or even that there is a tradeoff at all). As for whether EE still does so (or at least claims to do so, if what Hickory is saying is true), I don't know.

I know, and it's wrong. A person could write an essay on the inconsistencies with what's written (manual and in-game) and what's actually implemented.

Huh. Go figure. Does IWD also not scale XP according to difficulty? The game claims that deviating from standard difficulty in either direction gives more XP.

No, IWD doesn't either. There was talk (years ago) in the G3 forums about trying to get it to work for IWD-in-BG2 (TobEX maybe?), though I don't know if it was ever pursued.

A lot of good advice here, but the thing that I disagree with on a playstyle preference is sacrificing how you actually want your characters to be for ease of combat with the idea of "hey just use these builds and it will be way easy." Yes, of course, there are combat mechanics and things to learn to not screw yourself with making a character, but really, I find all this "do it this way" advice to be misleading. Do it how you want, it really should be relatively easily doable once you learn the game style a bit. But however you want to do it, follow these guidelines:

1.) Have a balanced group, and get 6 asap. Not too many casters, not too many fighters, a few ranged (and then have them use different weapons), a few melee (choose different weapons and have shield/no shield combinations), a very good healer or a 2 semi-good healers with other good qualities, someone to find traps and unlock things (though even this isn't necessary.) Use them as HP sponges. Positioning is very important. Taking a fight to a different room with a doorway or getting out of a hallway to have more freedom to move is frequently very crucial to making a difficult encounter quite a lot easier. Don't be afraid to retreat. A LOT. Take that character who only has 1HP left that 2 guys are attacking and RUN THEM FAR AWAY while focus-firing with all of your others to pull the attackers off. Rinse repeat until you've won. Even if you are only fighting with 1 character at the end vs. 3 while all of your other chars are across the map nursing wounds, you will very frequently win if you just use all of your characters' to absorb some damage at one point or another.

2.) Use all the spells, potions, and other usable items you have/find liberally. Then buy more and use them liberally. Pretty fast in the game you have enough wealth accumulated to buy 20-50 health potions to last you long enough until you have enough money and items that you'll never really be stressing for healing except in a timely manner in the heat of battle, as it should be. Cast your heart out until you learn what is unnecessarily too much.

3.) If something is too hard, go somewhere else and do something else and gain XP a bit then come back to it. This was probably my #1 mistake early on in my cRPG life. I'd get too far ahead too fast, missing content and therefor XP that was vital to a noobs enjoyable success. There's almost always something that can be being done to gain enough XP to lvl a character or 2 before you HAVE to have a combat encounter that may be a little difficult and have to sweat through it.

3.) Read the manual's combat section.

4.) And for your caster's sake, always have on stoneskin.

I'll add my suggestions.

You can encounter melee or ranged creatures, spellcasters, or a combination of both.

The priority no. 1 is to disrupt/eliminate the spellcasters before they fire off the spells. To do this, focus all ranged attacks on them and with your wizard(s) cast Magic Missile or Larloch Minor Drain on them. If there are multiple spellcasters, use AoE spells like fireball or throw potions of fire. After the spellcasters are eliminated focus on remaining creatures.

To deal with powerful melee or ranged creatures, have your tank equipped so as to obtain the lowest possible AC (full plate mail + ring of protection + other AC decreasing/modifier items) and keep it forward to attract all attacks on him, while your wizards and clerics cast disabling spells on them (blind, hold person etc).

Always keep your tank in front of the group, but not venture too far so that if you encounter spellcasters, your back row of casters/ranged can intervene quickly to disrupt them.

After you gain 5-6 levels, when you have level 3 spells and a lot of potions, the game became absurdly easy no matter how well balanced your party is.

Stoneskin isn't in BG1. (unless the Enhanced Edition adds it, but the OP didn't say he was playing that) Good thing, too, because the counter-spell Breach isn't in the game either. (Plus that's 5th level. You only get level 5 spells if you have the expansion, and even then only at the very end. And you'll probably want to use the slots for something a bit more cool than Breach.)

Wizards in BG1 are best protected by keeping them in the back and having them memorise mirror-image/invisibility to let them get out of trouble in a pinch. Potions of invis are also great as a panic-button option.