I'm having the same issue. Reinstalled the game, turned all my graphics settings to low, and still the engwithan arena sublevel does not load when I enter it. I get the black screen, the cursor loads, music cuts out, and I have to hard reset my computer (I can get the task manager to pop up, but it also freezes instantly.)
I even tried going into the sublevel without Aloth (I figured fewer characters = fewer things to process = success??) but it still crashes.
I can also go into the other areas in the digsite, as well as other places on the world map / port maje (loading times are slow, but not deal-breaking, and no crashes).
I'm using the GOG Galaxy version
and I am a little sad because Aloth's my fav, so it sucks to have the game blow up right when I recruit him blah