Ok, ive just tried this on a Windows 7 64bit sytem and it worked a treat.

It looks like the FFDshow codec is causing issues somwere along the line with decoding.

Removing FFDshow means that the game no longer lags when NPCs speak.

Im not sure if this will work with everyone but give it a shot, dont forget to restart your pc after uninstalling.

To un install just go to Add/Remove programes and look for ffdshow and uninstall it.

Hope it helps!

Edit: IF its not on your system then sorry i cant help

I think FFDshow was a problem for FO3 and even back with Oblivion as well.

Yes it was for fallout 3 for sure

I have the same problem and I don't have FFDshow on my system.

It's not in my Uninstall programs. I found it in a codec pack, but how can I delete it? It's just a bunch of individual files and it says I need permission.

Wish I could find what your talking about, what folder is it in?

Doesn't exist on my system.

check to see if you have any codec packs... also keep in mind this only will fix the mega slowdown related to NPC talking... not the other slowdown many others are having...

The K-Lite codec pack contains the FFDshow codec. Check your "Programs and Features" for that name. The start menu items for the K-Lite codec pack also contains the uninstaller.

Ok yea I have K-Lite & ffdshow but will that fix the lag that occurs when your not talking to NPC's? Because when I am not around NPC's my FPS is 60 or more consistently

I have neither...