Is there a mechanism available to determine if the player has looked at a note? I've been using OnAdd to set up quest details, but ideally I would prefer it if the quest was updated when the player actually read the note rather than when they simply pick it up.

The only way I can think of to do that would be to put the note on a terminal, then you could use the results script of the terminal option to verify the note has been read.

I also wanted this, but if its a note OBJECT then no you cannot. Just have it update the quest with an objective like this "Find John near the building mentioned in the letter." forcing them to read the letter to figure out where to go, instead of an objective like this "Find John below the old water tower to the east." Where they would not have to read the letter.

Only audio notes can run code when the player reads them, using the linked dialogue's result script.

Cipscis

That would be a good idea - but my quest doesn't give objectives, it's up to the player to figure out what to do.

I guess shall just have to stick with what I've got - a dialogue entry appears for one NPC assuming the player has read the note, as soon as they acquire it. A pity, but the same thing happens quite frequently in the main game so it's not unprecedented.