HI Madfang. I also am on PC and I have seen you in a few lobbies, now. Welcome to multiplayer!
No. It is not too late. There are still new faces I see every week. I have only been playing for a total of 4 months, off and on.
However you do have to really stick with it. The drop rates for good items are very very low, and the tiers are very hard from one to the next. The challenge is very steep between routine - threatening - perilous - and then ones above ... yeah.
I spend a few hours every day playing and I still feel like I am barely competent with the longtime players who zoom through everything on killing sprees before I get one or two shots in. But, after some time, you become suddenly able to hold your own, at least some of the time.
For me the most important items have been the life drain rings - which I could only get gray for a very long time and now I have blue ones. Healing bonus belt, and most of all, weapons which give you life back when you kill something. All of those I did not start getting until after many hours of play. But some say they get great items very quick - I think it is mostly luck.
But, most important, you have to level up all the different types (warrior, mage, scout) many times over to get the bonuses from the base stats. That's probably the most annoying thing about it. It is not so much skill as it is just repeat over and over to promote characters. You will learn eventually some tactics, but this game is less about tactics than about sheer power - in my experience. Yes you can hide in a room ... but most abilities from monsters go right through walls anyway so it is useless. But you may learn how to position yourself to avoid archer arrows or horrible green demon spew which is usually what kills me. 
YET it is very fun and the group play is much better than in some multiplayer games where people are only trying to compete and not help each other. In this game if you do not help each other you all die and fail. So that is nice.

Oh and about cloth. Yeah. It's the hardest to get. Try breaking down all gray items and, later on when you get more good items, most blue items and even the Master runes, as well. That will give more cloth.
Oh and disconnect/server/issues ... all have those. It's so terrible.