That sounds a lot like the "Exile" series of games by Spiderweb Software. The shareware versions are at http://www.spidweb.com. The games are extremely, extremely addictive. I have lost sleep playing them. One of the coolest things about the games is you are not locked into a particular "character class" - you can have a character with a Mage skill of 5, a Priest skill of 3, and an Edged Weapons skill of 15. All skills can be improved as play proceeds (which also contributes to the addictivity factor).

Some other cool things:

- An "Alchemy" skill, you can mix up healing potions or poisons.

- A "Defense" skill, which reduces the encumberance penalty of armor (for mages too!)

- An "Item Lore" skill, which increases your chance of finding items fully identified.