How do I re-light a torch?

Once a torch is fully depleted, you cannot use it for light anymore . However, a torch that is almost-but-not-quite burned out (which gives off a dimmer, orange light) can be placed in a wall sconce where it will burn at full brightness forever. Putting it in and taking it out will not refresh it back up to full strength, however.

One alternative to carrying around a bunch of torches is to get your mage a few points in Spellcraft and cast the Light spell. It had a fairly long duration and is cheap to cast. You'll still want to carry 3-4 torches in your inventory, though, as some are needed for puzzles.

You can cast Light by:

Getting Spellcraft to 5 and casting via the Balance & Light runes. If the rune grid were a numeric keypad, those runes would correspond to the 8 and 5 positions.