They haven't been very good, for a variety of reasons which don't really have anything to do with the original Pen & Paper games themselves.
Most games suffer from the problem of trying to invent another game inside D&D. Neverwinter Nights, Baldur's Gate & Icewind Dale all do this. They try to take some of the core ideas from D&D, then shove that into some other game system that has nothing to do with it and...well, it doesn't work very well. Because then you end up with all these weird problems you can't quite handle properly because you've changed the original mechanics in arbitrary ways, so you have to make even more mechanics to "bandage up" those holes and it just ends up being a mess.
Example: If you've only played games like BG and NWN, this may surprise you, but D&D is a turn-based game. Actual Pen and Paper D&D is closer to Final Fantasy Tactics than it is to Neverwinter Nights. What NWN (and games like it) has done is tried to take a system that was entirely designed to be played in a turn-based setting, and shove it into a real-time RPG. The result is now a bunch of the mechanics don't work anymore (i.e. there's no such thing as "turn order" in a real-time game, so
Initiative instead of being one of your most important stats, is now useless - and so is every class feature, every feat, every spell and every item associated with it), or don't serve the same purpose. It throws off the entire experience of playing the game, nevermind the game balance.
The only D&D adaptation I've ever played that actually implements the basic combat rules (mostly) correctly is
Temple of Elemental Evil. Unfortunately, while they got most of the D&D part right, the rest of the game has a ton of issues, like bugs, crashes and save file corruptions that never got fixed. There's a fan patch for it, but it's still barely playable, and the company that made it doesn't exist anymore.
And that's just combat. That's the
easy part (most of the rules are pretty straight-forward). That's without even starting to consider how to handle the more free-form stuff, like jumping, climbing, conversations and all of the other "RP" parts of the game. As you mentioned, that part is pretty hard to do in a game at all. Assassin's Creed is the only game I can think of that has done something close to free-form climbing well - it's a really hard problem. That level of stuff I wouldn't even
think of trying until getting the more mundane parts - stats, levels, classes and combat - down first. And like I said, I don't think any game has done a satisfying enough job with that part so far.
I've never played Masquerade, but I heard it did a decent job with the story/conversation part of the game, as well as having open-ended solutions to quests. The combat seems pretty bad, though.
Unfortunately, it doesn't seem like there will be any good games of this type anytime soon either. The new Neverwinter is terrible (and based on 4th ed. which...is a bad idea). Shadowrun is meh. Project Eternity
looks fantastic (graphically), but from what I've heard of what they intend to do with the gameplay, it's going to turn into another version of "let's turn a turn-based game into a real-time RPG and hope it works".