Long story short, third grade I was at the teachers house and anti-social as I was and RPG-fan as he was, I found a kickass rpg on his computer and tried it for a bit with others watching. It was really cool and had tons of races and shit, but I for the life of me don't remember it. I'll try to help how I can from what I do remember.

I made this to help! I'm sure it doesn't help but, maybe if I'm lucky.

As for graphics style, in town its one static picture and you can click on the different buildings or the questgiver. Outside it is top down. The looks on the avatars are sort of like Wizardry 7/8 in graphics quality.

Its not wizardry its not baldurs gate its not might and magic its not avernum. I'm a big fan of retro rpgs myself, also I went through a solid 24 pages on a big abandonware website and did not find it. This game is obscure and I'm not expecting to find it here, tho I am hoping.

Afterall my teacher had it on his desk as a cd in the early 2000's, this must mean you could buy it in Denmark which means it is not too obscure to leave the U.S. It clearly had a publisher.

Most important fact, when you enter a town you don't walk around it, it's a picture where you can click the houses or the questgiver.

Graphics are sorta like Menzoberranzan.

Well I can't help you, but hopefully someone here can - these kinds of questions are almost always answered. Anyways, +1 for the attachment. :)

Added second picture for what i mean with 'zoom in when talking' I also remember it being very dark, like night. And you traveled through wetlands like a marsh and fought either spiders or skeletons early on. Also important, Old Man Questgiver is the only NPC on the town screen, the other ones are inside the stores/possible temple/tavern/otherwise houses.

I don't know it either, but to echo budejovie, nice work there on the attachments. :D +1

If you get some free time you should check out the "Draw and guess the game thread".

Maybe any hint on the style - graphics, etc.?

Might and Magic?

http://www.gog.com/game/might_and_magic_6_limited_edition

We're not talking 80's style, it was better graphics than Might and Magic 5. However when you entered towns you couldn't look around, it was a static picture. Obviously not a high budget game like baldurs gate. Big fan of might and magic, its simlar in style, tho not quite. Also its not first person, once you get out of the town you will be going top down.

Maybe Legend of Faerghail? oh no that is not top down... You did not check out the awesome drawings properly!

Damn, I saw that now :P

How about Avernum?

http://www.gog.com/game/avernum_the_complete_saga

Saw that on abandonware. Not that sadly. Also the traveling is top down, not first person.

Avernum is also a pretty famous game, we're talking more or less obscure here. Avernum also didn't have a static town picture, you could walk around the towns. It also wasn't railroaded in my opinion. And you couldn't create tons of races new party members at the tavern.

The way you describe the town kinda makes me think of Rage of Mages, but I don't remember that game well enough to know if had all of the other features. I don't think it did.

Game sorta had the same graphical quality of Menzoberranzan. Though that's where the similarities end, that and the static picture settlements.

I've tried going through my head for some fairly obscure titles, but none really matched with what you're describing.
I did come up with , [url=http://www.mobygames.com/game/win3x/castle-of-the-winds/screenshots]Castle of the Winds and Yendorian Tales.

I think I might have been wrong on the top down/fps thing. It might have been

wizards and warriors.

has the static town(s), tavern party creation and tons of races down. Might have remembered the top down thing wrong, tho it nags me.

considering how few pictures of this exists I'll need to find a copy to know for sure.

Could it be Albion?