The manual instructs to hold your cursor over an inventory item and press a function key to assign that F key to that inventory item. It doesn't work for me. Is there something I need to do to fix it? Anyone else having this problem?
Also, E is supposed to open up the equipment window (equipped weapons and armor and such), but does not for me. It's the only one of that type of key that does not -- for instance I for inventory works fine.
Any help I can get fixing this would be great. I find games like this very hard to play if you can't switch skills/weapons quickly with F or other assigned keys.

You can only assign F keys to skills and potions AFAIK. Check the image attached to this post for an example of how to do this.
You are right, the E key should open the equipment window. I've heard of some laptop keyboards not working correctly due to the secondary functions the keys are assigned by the KB driver. Not the case if you are using a desktop. Try turning the NUMLOCK off as it can affect how the keyboard responds.
DD is unlike other RPG's since you can use a weapon for many levels before finding / needing a better one. I am in the Wastelands and I am still using the Sword of Chaos that I found about mid-way through the game. It seems that the most important consideration for a weapon is the damage done, the recovery speed ( zero is best) and the number of charm slots. An axe may do more damage but the recovery speed is slow meaning you get fewer strikes. A fast recovery [enter weapon] will do more damage quicker usually. The more charm slots you have also gives you the advantages of the extra charms add.
Find a good weapon and you will find yourself using it continuously while you will need to switch out your magic skills often as the damage done by magic can be very specific to enemies. Hope this helps . . . =)

Thanks, Stuff. I will play with the NUMLOCK key when I get home tonight to see if that works.
I wanted to put various potions on F keys, as I found that really helpful in Diablo 1 and 2. The difference between drinking a minor and major and full health or mana potion could be a big (and expensive) one, so you really wanted to get it down just right -- and fast! I'm not sure how you handle that in this game. I suppose just hitting the space bar constantly to pause the game and go on an inventory search? Extremely clumsy and tedious way to do it, if so. But perhaps there aren't different "size" potions anyway? Dunno yet, only level 2.

Well now, this is confusing again.
This post:
http://www.gog.com/en/forum/divine_divinity_series/beyond_divinity_couple_gameplay_interface_questions
says:
This fellow is using a function key on potions successfully in Divine Divinity.
Stuff is the first responder after his question and doesn't make any mention of it not working that way in DD.
???

The whole quote was him talking about DD, not the sequel. That's what he was making the comparison from, and the language was explicit. Check and see.
I see what the problem is now. I was opening inventory, clicking the potions and herbs button from within the inventory window, and hovering the mouse button over the potions inside that big box there. That doesn't work. But opening the browse potion dedicated menu put the potions on my lower right side of the screen, and from there I could indeed assign a function key to my stack of health potions.
We got a little mixed up in our language today, but your picture helped me figure it out, and thanks much for taking the time to help!
Regarding the E key not working, I tried turning number lock off and on and it's still no go. I may put it on an F key and then program that key into my logitech Nostromo-like device, forget what it's called. I used that on Sacred Gold a lot and it was very cool for keeping a bunch of buttons in easy reach while letting me move my hand and arm around every so often so stay comfortable. I'll give it a shot.
Thanks for the suggestion though! I'll mark this as solved, because it sounds like it's just something that's broken in the game rather than something I didn't understand or know.

You're welcome, glad I could help. Binding the keys can be disconcerting at first. After Sacred, I see why you felt the need to bind weapons. I believe you will enjoy DD as it is fun to play.
I will continue to look for the E key solution. I haven't come across this problem before. Enjoy . . . =)