Is there a certain special process that you have to go through to transfer your character from BG1 to BG2? And does only your charachter transfer or the whole party? And finally what happens to your gear and your gold when you make the switch?

The process is relatively painless. Only your character transfers, you meet up with some old NPCs right at the beginning. Whether you travelled with them or not. As for your equipment...well lets just say that it isn't all gone:D!

BTW you will need to "re-select" any spells again. So for wizards, don't bother about memorising any that you really don't use. Sell them I say.

Export character from BG1. Then when starting a new game in BG2, import your character. Your equipment disappears when the game starts, but there is a way, which some say is cheating, to keep your old equipment. I have two characters/games going: one where I did not bring in old equipment and one where I did. If you want to know the method just state so, and I'll add that later into my reply.

Am I right in thinking that you only start out with one item the regular way? A certain article of clothing. [img]smile.gif[/img]

Link in my sig
Chapter 12
About 3/4 of the way down the page, there's a horizontal bar. Everything below it deals with the transfer from BG1 to BG2.

Yes, there is one item of clothing that can follow you--if you had it in your main character's Inventory when you Exported, you will find it again very soon in BG2.