According to the Wizardry Archives manual, Gnilda forged the Staff of Gnilda, a magical artefact to protect the City of Llylgamyn. This means that Gnilda must be at least a powerful magician. As the quest of Wizardry II takes place in the Temple of Gnilda, Gnilda might be a god (or goddess).
When the adventurers start their quest for the Staff of Gnilda in Wizardry II, they encounter the apparition of Gnilda. Gnilda tells them that he (or she) has reclaimed his (or her) symbols of favor (= the staff) because the City of Llylgamyn has shown its unworthiness, obviously meaning the tyranny of Davalpus. Gnilda wants the characters to find the parts of the Knight of Diamonds's armor and present them to him. Only then Gnilda would return the staff and his favour to Llylgamyn.
Sources[]
The Ultimate Wizardry Archives (Manual), p. 60.