It depends on your own game world. My homebrew world does have isolated populations that don't want to mix, but the world has gone through enough that there are a lot of mixed populations simply due to survival issues. I personally HATE the "my mommy was raped by an orc" half-orc thing so I have populations of "neutral" (or even good, see below) orcs that get along fine with humans, elves, etc. There are also "tribal" orcs that are more violent and xenophobic.
Basically, my world suffered a major catastrophe a little over a 1000 years ago, the communities that survived were generally the ones that were willing to work together. The world is a harsh place that is only now getting "re-civilized" with people sponsoring expeditions into the "wilds" to explore old ruins in search of artifacts, treasure, etc.
If you use the tolkienized elves, dwarves, etc, I can imagine them not getting along well. That is one of the reasons I went with the world that I did, in this world people can and will work together no matter what the race because, frankly, survival once depended on it and this helped remove most racial tensions.
Oh, in my world alignment is not based on race, ie, not all elves are good, not all orcs are evil, etc. I find that if you stress that at the beginning PCs/Players are more willing to try to negotiate their way out of a difficult problem (not that it always works) rather than instantly go for "kill it if it moves."
