You can also take a look at this one (Random dungeon design).

Yes, Diablo 1 is ramdom generated levels. *All except the few special case levels, 15 and 16, and any sub levels*

It does have a few bugs, as at times you do find small parts that are closed, but cannot be accessed. *More often in caves, few times in the Catacombs*

For something like Diablo it appears to mostly be set around the main rooms. *Well, atleast all but caves appear to be, the caves are slightly different it appears* These main rooms are set in a tile pattern *I think 1/4 their size* and then using hall patterns they are connected by placing the hall 'tile' units in place with a fairly straight foreward pathfinding. *Humm,... speaking of that game, I think I'll find that CD and load it up.*