While there are at last count 20+ godtouched races, there are only a handful that players in the system will be able to create characters with.
Humans, anthromorphs, ardlins, harpies, naga, orchaein and satyrs are the normal playable races. Theromorphs, while discussed in the anthromorph entry, are not going to be normally playable.
However, there are races that can be played with special permission granted by the game master, due to special weaknesses or strengths, or even simple eccentricities in their design that might allow them to easily disrupt or degrade a fun and engaging playing environment.
These special races fall into two different categories, limited and restricted. Limited godtouched races are not particularly unbalanced at first blush, though their abilities are still worth a second look for the game master of anyone wishing to play them. On the other hand, races in the restricted category not only have special abilities and odd traits, but due to the political situation in the world of Aarn, they would also have a great deal of difficulty undertaking any kind of normal social interaction, even with the aid of allies. While I know many people like playing the reformed monstrous pariah, or even simply an evil monster that massacres all, that's not something I plan on making easy to do.
The limited races are as follows; Centaurs, ghrok, dreamlings, spirit animals, theromorphs and (while not technically a godtouched race per se) the half-human, half-vampire dunpeals.
Centaurs are limited because of their quadruped status. Their movement speed and carrying capacity would be double other creatures with the same strength score. If that weren't enough, they have greater strength than other creatures. Despite a reduced agility and greatly reduced charm, those shortcomings are not quite enough to balance their strengths.
Ghrok are limited not because of any special powers they have, but because they cannot actually speak any vocal languages. This can be an interesting handicap for the experienced role player, but I don't particularly think it's good to have a mute race as a player character default.
Dreamlings are limited not only because of their shape-changing abilities and natural access to divine magic for free, but they also are supposed to be extinct. There are bound to be a handful of individuals still hanging around, but the GM and player would need to very carefully work out the character's history, and ensure the character would act appropriately and not reveal their true nature.
Spirit animals, while originally a default player race, has been moved to the limited category due to three reasons. Like ghrok, they cannot speak normal vocal languages. They also have the very special ability to, upon death, bypass the afterlife system entirely and immediately become a type of undead called "anima" that can possess and permanently steal the bodies of others. Finally, they also gain free access to elemancy, making them an extremely unbalanced race, though interesting to play.
Theromorphs are limited due to their animal personalities, antisocial behavior and the fact that while similar to anthromorphs, most people can tell the difference between the two, and theromorphs are hated due to the disease they spread.
The final limited character type is less a race and more a template - the dunpeal, the child of a vampire woman and a living godtouched male, can be applied to characters with special GM permission due to various vampiric powers they inherit.
Races that are restricted are salamanders, medusae, merfolk, valdrex, and vampires, which are a template applied to other godtouched races, like the dunpeal, but with more abilities, and also more restrictions on social interaction and of course, their allergy to sunlight. It is highly recommended that a player is never allowed to play a restricted race, though they make for excellent NPCs.
I will admit that while at first blush it seems like there aren't any particularly good role playing options for those who like undead, there is an entire branch of elemancy devoted to the magical element of death - those who use this elemancy turn into near-undead themselves, which increases the variety of undead characters allowed.
Races that cannot be used for a player character under any circumstance are dragons, phoenixes, sphinxes, and unicorns. I suppose if you really, really want you can develop your own houserules to allow players to play these races, but I still find it drasticly inappropriate, personally.
There are many other creatures on Aarn, such as goblins, giants, lizardmen and others, that are technically animals. They cannot cast magic and are only marginally intelligent, which greatly limits the options available to someone who wishes to play one, despite their tribal and social nature, and ability to learn pigin languages for communicating with players.
However, there are anthromorphic versions of every animal in the setting. For instance, an anthro giant is called a half-giant, and appears human for the most part despite its larger size and lack of actual giant heritage. An anthro goblin is called a hobgoblin, and an anthro lizardman is practically indistinguishable from an anthro lizard, though probably appears more human than an anthro lizard does.
I apologize that I've limited many fantasy tropes in such a way, and practically removed any culture such hobgoblins and half-giants may have as a race. I feel, though, that it adds a special flavor to my setting, having these traditional creatures be represented as anthropomorphic "animals".
Many other fantasy tropes, such as dryads or the halfling-like grassrunner, have instead been included as a type of fey. Of course, due to their godlike nature, it is completely inappropriate for a player to ever play a fey. I do not discourage these kinds of games, but do feel that if you want to go down that route, you may as well simply use my setting in a free-form way and abandon all the rules and dice entirely.