I think it's a combination of both; humans, elves and dwarves hate all orcs because the ones they encountered are evil. So, even when orcs like Rantine try to make peace with them, humans just assume that the orcs aren't being sincere.
To get back to the Rantine/ Magnadine issue; these two convert the groups that would be interested in them. Rantine converts orcs that are already settled down and somewhat civilized, and thus interested in joining an orcish nation. Meanwhile, Magnadine converted orcs who were more interested in fighting things, and would be happy to join a faction of mercenaries (cause then they can get paid for doing what they loved).
Depends what you mean by racism, since we are all one race, neanderthals haveing long since gone, and no DNA present in human DNA from them, racism is simply what we do to get one section to exterminate or expoit another, but with actual Elven or dwarved etc racism is simply a deffiernt thing altogether.