The abbreviations can be found via Google or Terra Arcanum. WE is weight, SP is Speed, TH is To Hit, those I recall.)
Gnomes have a -2 on CN, which is annoying for your fatigue (=mana) regeneration. Small armour is also harder to find. 2 extra ranks of Haggle don't help. It only counts for half a point.
I'd go for a Half-Elf (bonus to DX, which is the most important combat stat). Only Child is a good background, but keep in mind you will only have one NPC, and for story reasons, I always take Marcus & Virgil. The game is perfectly playable solo, though. Beat with an Ugly Stick, Half-Troll Offspring & Raised by Orcs are all very good alternatives.
DX is by far the most important stat: it determines how many things you can do in a round. It also governs Melee & Dodge. ST is also important, for damage and for carrying weight. Carrying too much limits your speed, thus your actions/round.
WP is important as requirement for spells.
Every fourth point of IN allows you to have an additional spell active. Make sure you have at least 8 INT (You'll need 12 for certain NPCs to join you, a potion can help), since you'll want Sphere of Protection (first or second Force Spell) and Agility of Fire (extra DX), later replaced by Haste active during combat.
CN determines how fast your Fatigue regenerates, make sure you have at least a HR (Healing Rate) of 4. That happens around 9 or 10 CN, IIRC.
PE, BE, CN above 9, IN above 8/12 and depending on wether you want NPCs or not, CH, are useless.
Raise DX to 12 and Dodge & Melee to 3 ASAP, then become at least a novice in both. That handles combat on the midterm.
Sphere of Protection, Agility of Fire, Minor Heal are your primary spells.
You'll want to work towards Fireflash, Major Heal, Haste, Teleportation & Identify (SO HANDY!). I also take maximum ranks in Force, to deal with the enemies that damage your weapon. IF your magick aptitude isn't 100 by then, take some more spells in schools you've started. Magick Aptitude determines the power of spells and how much benefit from magickal gear you'll get.
I also take two points in Smithing, since a Dwarven Sword is an incredibly good weapon at the start of the game. Personal choice, though.