I don't remember but here's what I can find on the game's wiki.
You can not rest when enemies are nearby, or immediately after being in combat or casting a spell. In certain areas you can not rest at all, and in other areas enemies may interrupt you while resting. In the official campaign it takes 5 seconds to rest, and there are no other restrictions on how often you can do so. The rules of resting may be different in other modules.
You couldn't rest in combat, but you could after. Like a few seconds after combat. When enemies were near, you could take a few steps back to rest.
There weren't many "no rest" areas at all, as I recall. Very rare. Resting was almost always a freebie in that game.
I don't remember ever being interrupted by an enemy during a rest in that game.