I have this identical issue, right down to being unable to progress to the cave area.
To trouble shoot I first determined that the game is UNABLE to create the standard default save directory username/saved games/pillars of eterinity. It simply does not exist. This could be a write issue as suggested so I manually created the directory path and enabled writing. However, it still does not work.
Additionally, in the game itself under save option it states : 'tPlaythrough game'
The small t before playthrough is not a typo. I think the game is attempting to exception handle in whatever language it was written. I do wonder if it's possible to change the default directory.
I have a windows 10 machine, new system etc. I performed a manual instal via GOG (the initial poster installed via steam).
This is a game-breaking bug so I hope someone can help.