Go to the Daggerfall directory on your hard drive. Find the file called Z.CFG, open it up (with Notepad) and add the line: cheat-mode 1. Now start up the game. While in a dungeon hit Ctrl and F4 to toggle 'God mode' on/off. If you fall down a pit, or get stuck elsewhere, Alt and F11 will  to hit this key combo a few times though).