BetterThanLife over at Machinations.org has posted a tutorial on conversations. This tutorial teaches you how to implement conversations, and then goes into some of the more advanced details of creating different types of dialog conversations. The included module, gives three distinctly different examples. An explanation of the use of 'static cameras' is also given and shows how they aren't as 'static' as many think.
Download the zip file with a pdf and example module here: http://www.machinations.org/NeverwinterNights2/ConversationTutorial.zip
(Thanks to Usheen for pointing out the new, working link.)