I'm not sure if anyone is interested, but I will still write about my playthrough in case it helps anyone.
Playing the game on 1600x1200 resolution fixed the negative reactions bug I mentioned, strange that it's related to resolution but it's what it is. That was an annoying bug, so it's good to be able to play without this bug.
As I mentioned earlier, I started my second playthrough using the latest Multiverse 1.4.0.2 version again and as an Evil Elven Mage. The game went really well till I tried to join the Dark Elves, at which point I was already level 44. However, the quest to join dark elves involves 'Kill all the inhabitants of Stillwater' quest. I've killed all of them many times, tried over and over again but the game just doesn't recognize that all of them are dead. In case someone says 'You probably forgot some NPC somewhere', I will list everyone I killed so that we can make sure it's not me who missed someone. General goods gnome merchant, all the nobodies in the pub, half orc beggar outside the pub, everyone inside the inn, all 4 guards in town, priestess in the temple, blacksmith Richard Leeks, dodge master Adkin, local mage Cyrus, ruby admirer Gildor Nightwalk, the statue thief Marley, the smartass elf Myrth, crazy rabbit hunter Stanley Hippington, the ogre Drog Black Tooth, and even the purple rabbit in the lair. There's not a single living soul in the city.
I googled a lot but seems like nobody else faced this issue, or nobody bothered to write about it. I thought maybe it was related to my save game, because I had already killed Myrth and Marley much earlier, maybe they were the problem. So I thought, if I could kill everyone with my previous savegame from my previous playthrough, and compare the values in the savegames before and after the killing via the Hex Editor, then I could understand which values refer to the killing and getting the 'Butcher of Stillwater' reputation. So I did that, and because I was good aligned in my previous one, everybody was alive and in the city, including Adkin. Unfortunately, after killing everyone again, nothing changed, I still didn't get that reputation and didn't earn the fate point from killing everyone.
As this is the only way to join the Dark Elves and continue with the evil path, I decided to give up and left the game at this point. I'm writing this to in case anyone else will be thinking about playing the evil path using Multiverse edition.
Considering the project seems to be abandoned, maybe you guys were right, maybe I should have played without the Multiverse Edition. Anyway, I played too much Arcanum recently. I guess it's time for a Baldur's Gate playthrough