Shadows are non-existent in places where the character climbs outdoors, such as mountains and other regions separated from the normal map by altitude blocking, any fix?

Might want to try dgVoodoo 2.

https://www.gog.com/forum/divinity_series/divine_divinity_smooth_fps_using_dgvoodoo_2_guide

Interesting, you mentioned in the link FPS drops problems which I solved by disabling Direct 3D in the game config .exe, I'll do some tests on my copy of dgVoodoo then in relation to my problem with shadows.

Using software rendering was a gimped last ditch effort by the developers in order 'if nothing else works use that' solution.
But it is the worst way to run the game as it will have less graphical features and runs slower.

Here the game with software rendering runs very fast on loads and normal on gameplay and there is no graphical difference with the other option, perhaps because my PC is old and doesn't use Direct 3D properly.

Tests done on dgVoodoo 2 about my problem, using with the game's Direct 3D what happened differently was removing the character's shadow completely, still no shadow of the character in the OP case on both options.