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I'm new to this series, and so far really loving W8, but how do I identify items? Do I get some spell a bit later or what?
This question / problem has been solved by Garranimage
Your characters will automatically attempt to identify something when you first acquire it. (The best Artifacts skill in the party determines success, but every character has a chance to improve their skill.)

If they are unable to do so then it will remain unidentified with a big question mark over the icon. There are two ways to identify it at that point:

Use an Identify spell, which is occasionally found on scrolls, but can also be learned by characters with Divinity or Psionics - you'll be able to buy books of that spell in Arnika, among other places, if you don't take it at level-up. You need a minimum skill level and it can use a lot of magic points (Mental), so this option can be difficult (or at least time consuming) until the caster has trained those skills up a bit.

Wait until your characters' Artifacts skill has improved. If you right click an unidentified item to examine it, it will re-test your Artifacts skill to see whether the item can now be identified. (You won't get any skill-ups this way - that only happens when an item is first acquired.)
Post edited June 04, 2013 by Garran
Also note that Identify scrolls are only power 4, making them unable to identify most of the stuff you'd want to use them on. If you don't have a character who can actually cast Identify, it can be pretty difficult to get stuff identified without using thousands of Icicle Stix to get your Artifacts up. Some of the musical instruments require over 100 Artifacts skill to assay, too, which means you'll need Artifacts-boosting equipment like the Philosopher's Shield.

Personally, I just used the Cosmic Forge game editor to make the Identify scrolls cast at level 7.
It's a pity vendors can't identify items for a fee. I've got half a dozen unindentified expensive spellbooks sitting in my party inventory because none of my characters is skilled in Mental magic.
If your characters can't identify the spellbooks via Artifacts then there's a good chance that they can't learn the spells inside anyway (they'll be level 5-7 ones).

Minor Spoiler: Several of them are probably Set/Return to Portal, since you'll tend to collect those in and around the Trynton and Marten's Bluff areas.
If you have someone in your team with alchemy skill, you can also train your artefacts skill (an make a shitload of money!)

Just buy light healt and moderate health potions and mix them together (a skill of 15 in alchemy is needed) ONE BY ONE, and identitfy also ONE BY ONE simply by right clicking on them. Every time you do identify an item, there is a possibility the skill of some your party Members in that skill will rise.

By the way, you'll get Heavy health potions by mixing them, which are more valuable then both of the ingredients together, so it's also a nice way to make yourself as much money as you need