Got the quest, found The Butcher, died in 3 seconds as a lvl 2 Rogue.

Are you meant to level up more? Only this seems to be the first boss in the game.

Not sure what Im doing wrong, whilst ive been playing games for nearly 40 years I never played old school RPGs like this and am struggling

Are you kiting him? You can't let him catch up to you because you are too squishy at this level. Put some distance between you and Butcher, take a shot, move away again, take another shot...ad nauseum.

Edit: you should also be higher than level 2. Clear out the current and previous level first.

Edit 2: I boot up the game and messed around with rogue. I got to character level 4 before entering dungeon level 2.

Actually, there is an easier way to kill the Butcher as a rogue at this level. (This could apply to a sorcerer, too, but I've found it's trickier.)

The first key is noticing that Levels 1-4 of the dungeon (the cathedral levels) all have rooms with grills that allow you to shoot through them, which also has a door leading to the room. The other key is knowing that the Butcher is incapable of opening doors. What you do is lure the Butcher towards the room with grills in the walls then quickly close the door. The Butcher will simply wander around outside the door unable to do anything, and you can shoot him through the grills. He can dodge many shots, but since you have mostly unlimited ammo in this game, you can just keep it up until you kill him.

One warning, though: you must not kill any monster in the space of the door. If you do, the door becomes blocked and you will be unable to close it. Also, it's best to make sure your bow is at full durability before you open the door to the Butcher's room. The Butcher takes a while to kill, and you don't want your bow breaking while he's out there.

(As for sorcerers, I found it best to mainly use to same technique. The only difficulty is the Butcher is hard to hit with the spells you probably have available: likely Flame Bolt and Charged Bolt, and you can easily drain all your mana without killing him. The solution I found to killing the Butcher at that level as a sorcerer was to invest in Flame Wall. After you seal yourself off in the room with the grills in the walls, cast Flame Wall (multiple times if necessary). The Butcher will wander around in the flames and die quickly.)

(Finally, a warrior at this level is generally capable of going toe-to-toe with the Butcher but will need a lot of healing potions.)

(One more thing, since I read OP more carefully: your character should be a few levels above 2 when you confront the Butcher. Clearing out all of Levels 1 and 2 of the dungeon should advance you beyond level 2 and is a very wise course of action before taking on the Butcher.)

The Butcher uses a very simple AI script, which is both what makes him dangerous and, if you are willing to exploit his weaknesses, very easy. Roughly, it is:

if idle:
- if adjacent to player:
- - attack player
- else:
- - move toward player

Note what is absent: any ability to delay, backtrack, or open doors. Since there is no delay, The Butcher attacks as often as his animation will allow, causing him to deal damage rapidly. However, since he cannot backtrack or open doors, you can escape The Butcher by closing a door between you and him, or by leading him into a dead end. One particularly popular exploit which, if successful, makes the fight absolutely trivial for a rogue, is to lead The Butcher to the down stairs, then the rogue runs in a circle around the stairs until The Butcher takes a shortcut and steps into the stairwell. The rogue then stands beyond the far wall, 2 tiles away. The Butcher cannot backtrack out of the stairs, nor can he attack across the stair wall, so he stands there. As long as the rogue holds position, The Butcher will remain immobile, where the rogue can easily kill him with a bow.

For a slightly less cheesy approach, lead him to a grated wall with a door in it, run through the door, and close it. He will pace back and forth outside the grating, allowing you to fire on him safely - but you will miss frequently due to his movement.

I tried facing the Butcher just now. This is the best method for a lowbie. Went down pretty fast with my non-magical longbow.

I learned my lesson 25 years ago. Simply don't kill him. There is zero need to. If you want, you can cheese him using a method above, or level up a bit and take him down. But... he just drops a Sword. It's not a bad sword.. perhaps useful if you're playing Warrior. But otherwise, just don't even open his door. Move onwards and downwards to Diablo and don't waste your time.

This is misleading at best. In single player, the quest The Butcher will yield a unique axe, The Butcher's Cleaver. In multiplayer, The Butcher, like all unique monsters, drops a random magic-or-unique item, which might be a sword, but it could also be a shield, a weapon (club, bow, axe, staff, etc.), a ring, an amulet, a helm, armor, or even a book.

Sorry that's what I meant... the Butcher's Axe. Which is not needed at all, particularly if you are not a Warrior.

So I'm confused. I never saw the Wounded Townsman outside the Cathedral that starts the Butcher quest. The NPC just wasn't there. I've fully explored all areas of each level of the dungeon and I'm on the tenth level now with a level 18 Warrior. They're still not outside the Cathedral.

Did I miss something, or is my game bugged? I chose the vanilla version out of those three options given in the GOG Launcher. Anyone else having this issue or know how to resolve it?

Diablo has many bugs, but this is not one of them. If you are in single player, then you have a chance to get the quest The Butcher. If you don't get that quest, then the Wounded Townsman will not appear, and The Butcher will not be placed. Consult Jarulf's Guide for a full list of quests, and an explanation of which quests are mutually exclusive.

Thank you for the info! Never knew this.