Foreign Languages

A friend offered four possible ways of portraying foreign language in prose and asked fellow writers (myself among them) which is the preferable method: 

1) Repetition in the dialogue using the main narrative language: The German tipped his hat to the Englishman. "Wie heissen sie? What is your name, sir?" 

2) Explanation in the tag: "Wo yao yi ping lu de che," she said, ordering a cup of green tea. 

3) Direct translation in italics: "Ite maledicte in ignum eternum!" Depart ye evil-doer into everlasting fire! 

4) Don't offer any help; let the reader sort it out for himself. 

My preference lies with #2 although I've also used #4 and tried to provide enough context that the reader will have an idea. I agree that one should be very judicious in the use of foreign languages and especially to make sure that what you've written is correct. 

In a fantasy/science fiction context, unless you're a linguist like J.R.R. Tolkein, I think a writer should avoid creating a language and using it in the text at all costs. Rather, think of the general sound (gutteral, singsong, &c.) and describe that rather than making up words. 

That said, I found a very good "toolbox" for creating new languages here: http://www.zompist.com/kit.html and have tried it out myself. In the end, I decided it was way too much work for the results a non-linguist sucha as myself (I only speak one language, a linguistic phillistine, really) would get out of it.