Played it through to the end. You captured the obliviion look and feel almost perfectly. I like the idea of low/no combat games and the style fits the kind of simplified conversation style well. The walking sounds were a little loud relative to the music and I'll echo what everyone else said, lock/hide the mouse and the FOV is way way too close in. I think the FOV might be good for conversations but for exploring it felt rough. I did see the lady in red which seems like a luck thing and chased her down. The bones of a really neat experience are here and it looks and sounds really good.

I really like your writing style, it fits the world well and the first town feels like something out of an early 2000s CRPG (in a good way). 

I agree with Grubwall on most of their feedback, especially locking and hiding the mouse cursor, I got very distracted seeing it fly off my screen while playing. I also did not see the Lady in Red walk into the forest, so it took a little bit to find her. Something that may help folks visually find her is if the forest is a little darker, but a dim light (candle or magical flame) is in the distance. Alternatively, you could alter the textures to look like grass that's been walked over so there's a slightly less obvious visual cue, but still something.

You should keep working on this project, I'd be interested to see where the story goes!

I really like the idea of being just the "courier" instead of a "standard fantasy hero", I think you did a good job on the writing too.
Some feedback to consider: I think the field of view is a little low for a first person game. Pressing menu while playing teleported be back to the horse. I guess I wasn't looking in the right direction when my character noticed the "lady in red" so it took a while to find her, thankfully you have the boy mention she's in the woods. Locking and hiding the mouse cursor when walking around look and feel better. Best of luck with developing the game further! :)