I start my character and watch the movie then when the movie ends there is this box saying that 'That lousy someone has been spreading rumors about me. I dont need help in anything.' and so forth. All i can do is leave little arrows where ever i click. How do i get past this and into the actual game? Any help is appreciated.

Make sure you install through DosBox or use a pre-configured installer - I like the French one (link below)

http://theelderscrolls.wiwiland.net/?title=Daggerfall_:_DaggerfallSetup_EN

JimC