Greywolf1: I know I'm replying to a 13-month-old post. But I feel it shouldn't be the last word of this thread.
Yes, the language should be changeable in-game, and it isn't (to my knowledge). And I believe that changing the system language will solve the problem (just like getting the Steam version of the same game).

On the other hand, ric_happy's solution, to modify the lang.txt file, works and is much easier to do.

NolanRaSinjaria: Go to the folder "C:\Users\[your windows username]\AppData\LocalLow\InXile Entertainment\The Bard's Tale Trilogy"

there you can edit the "lang.txt" and enable the desired language by removing the # in front of it :)

ric_happy: In the directory %user%\AppData\LocalLow\InXile Entertainment\The Bard's Tale Trilogy
you find a file named lang.txt
Open this file in a text editor and remove the #-sign in front of the language you wish to use.
e.g.

#en - English

to

en - English

This will override the language setting. On your next start the language should change to english.