I am a bit confused about how THACO works. The manual gives this example : "If you have a THACO of 18 and you attack a monster with armor class of 5, then you need to roll
13(18-5) or less using a 20-sided die.
Most of my characters have a THACO of about 18. Does that mean if I attack someone with armor rating -5, I will never ever make a hit? Does the "to hit" bonus reduce the THACO? Why does the bonus say +2 or +3, instead of -3 or -4? As I understand it the lower the THACO, the better. Right? Also, I was reading this guide that said that if, say, a fighter used a weapon he didn't have proficiency in, he'll get -4 penalty to THACO. Shouldn't that be +4?

I'd like to know whether "to-hit" and THACO are related. And what other skill affect THACO(apart from dexterity)? My characters are not making many successful hits. Too may misses and few critical misses here and there(though they are all level 1 or 2 so maybe that's how it's supposed to be).

OK first off THAC0 stands for To Hit Armor Class 0. So, a THAC0 of 18 means you need to roll an 18 or better on a 20-sided die to make a successful hit on something with an AC of zero. If someone has an AC of -5 then you'd need to roll a natural 20 (which always hits; just like 1 always misses). The pluses and minuses affect the die roll, so a +2 weapon means you add 2 to your die roll; a -4 proficiency penalty means you subtract 4 from the die roll.

So for a successful hit:
Die roll + bonuses - penalties > THACO - AC

I think I got it now. Thanks!