This is the first game of this type that i have played so please pardon my ignorance. I have about 10 hours played so far and have yet to see any difference in the types of weapons I am finding. Is tehre a system in this game with loot rarity (like WoW's blue-> purple-> orange) etc...?

I haven't seen one so far. You might have to evaluate items based more on what they do than visual cues, but I'm actually happy about that. I remember... Pale Justice? in IWD? It didn't even have the blue border to show it was magical, so some folks would overlook it, but that sword was arguably the best in any IE game just for the coolness factor. :Cant's appreciative grin icon: On the other hand, dennis, I haven't gotten far into the game, so maybe I'm wrong.

I think they are all blue. 

normal stuff: no special color;

 

anything with an improvement on it: blue

 

so, yeah no real classes there. you have to look at them and decide if they're any good (but then the ones with names are usually a lot better than "fine" ones, and exceptional ones are often close to the named ones, considering you can enchant them further)

Goes back to Baldur's Gate, where magical items had a blue background. Blue just means "improved".

Fine<Exceptional<Some named<Superb<Other named.

But no color coding, and there is variance because of other enchants and such that can modify them for unique purposes.

There are normal weapons, standard enchanted weapons (e.g. Fine Battle Axe), and then uniquely named weapons which tend to have a bit more to them.

Actually more colour coding might have been a little fancier. Maybe it could have been based on the amount of used enchants on the item, e.g.

 

<5 enchant points - blue

5-9 enchant points - yellow

10-12 enchant points - orange.

 

This could make a nice mod.