Add the spell or item you want to hotkey to your favorites menu
Open your favorites menu (default - hit q)
Hover the mouse pointer over the spell you want to hotkey
Press a number key from 1-8
Voila.

Protip -- you can switch a spell to your off hand by double-tapping the hotkey

Although this is PC-specific, it would be great to sticky this in the general forum. Most of the questions I read about hotkeys on the PC version are in the general forum it seems.

I have the PC version and I'm enjoying Skyrim's combat much more w/ the Xbox 360 controller for Windows.

*runs away*

Most of the questions are about this.

The complaints are about the favorites system disabling itself if you change the key mapping of just about any keys.

Good point. Fixed. And I agree, the key mapping issues require immediate attention. Please fix them, Bethesda.

The one thing I wish hotkeys could do is if I could assign two items or spells to one hotkey instead of having to hit 3 keys to dual wield something; kinda defeats the purpose of hotkeys, its not really faster than just selecting them and the only advantage really for me is it doesn't pause the action but still annoying.

Thats not the problem at all, the problem is the keybinds interfering with most menu keybinds that should never change no matter what custom settings you use.

Please fix this Bethesda!