I recently set up Daggerfall on a Windoze XP machine using Dosbox 0.72, installed the 213 patch and created a Khajiit Thief character.

I have cleared Privateer's Hold 3 or 4 times now, and he's at level 3. For some reason, none of his language skills have gone up by even a single point. I've even tried repeatedly clicking on the Orc in dialogue mode and hanging around within hearing distance for extended periods.

I don't remember it being that difficult to raise them when I used to play DF in Windoze 95 and 98, especially when they were very low.

Is this a known problem?

Every skill in DF gets "trained" once per use. One use of a skill has a 0 percent chance of raising a skill. If you use a major skill 15 times (or so) you will have a high percentage chance of an increase. For a minor or miscellaneous skill, it will take more tries. If you really want to raise your Orcish score, go talk to Gortwog. Talking to him counts as a Orcish skill usage, and he won't attack you.

Although miscellaneous skills are harder to increase than primary, major and minor skills when they're at similar levels, miscellaneous skills start at much lower values and lower values are easier to increase than higher ones.

Other miscellaneous skills have increased. Hand-to-Hand is at 11%, Axe at 12% and Long Blade at 16%. Even Medical has gone up to 6% from 3% and that is only used when resting.

I know language skills aren't amazingly useful, but I'm starting to wonder if other skills might also be affected that I haven't found out about yet.

Languages are checked when you get close to monsters. It works best for characters that don't use heavy armor and don't carry a weapon in their hands. When you get close to a monster, if you have an high language skill for that monster there's a chance he wont attack you (works like a charm spell).

My character is a standard thief, so only has leather armour. I have been approaching the orc in dialogue mode with my weapon sheathed and clicking on him. I've also tried hanging around within hearing distance of his grunting.

I haven't tried this as often with the imps as they have a ranged magical attack.

Wyzardry, the language skill might be checked only once per monster, so approaching the same orc over and over may be useless :shrug:
Find a dungeon crawling with orcs and you may find your orcish increasing, Still, I rarely have a language skill increase with any of my characters, but it happens--not because I try to talk to them, because I never do, but because I am encountering lots of them.

You might be onto something there. I tried entering Privateer's Hold, clicking on the imp in dialogue mode, killing him, leaving the dungeon and then doing it all again about a dozen times, and my Impish skill went up by 1 point.

Now that I know the language skills can be raised, I'll leave them to develop naturally.