I have the dialogue set up, have my mp3 recorded with the correct frequency, bitrate, mono, in the correct path, nothing.

I don't know what else could be wrong. The audio should still play even though I haven't done the lip files yet right?

Okay, I created the lip files and it still doesn't work. I replaced my audio and lip file with that of a completely different line from a completely different mod that I know work, and it still didn't work.

I don't know what else to try...

You did name the file correctly, right?

Yes. In fact in the CS, clicking on the dialogue under "edit response" window actually plays the audio. There are Y's under lip, mp3, etc. The character won't speak in game.

Tried a clean save, tried using vanilla greeting mp3/lip file, tried renaming both the folder and esp.

Nothing.

Okay, here's where it gets really weird. I replaced the mp3 and lip files of a line of dialogue in another mod, with my recorded mp3 and lip file, and played the other mod. The other mod played my recorded audio and used my lip files fine. So there is nothing wrong with the file themselves.

I also tried using my same mp3 and lip file for another line of dialogue for another npc, and it worked for them...looks like it's on a line by line basis on whether it feels like working or not..

I had this exact problem. What worked for me was to change the race of the NPC and set up the dialogue MP3 files again from scratch and it worked. This is a really wierd bug and it didn't affect my first voiced NPC, but did the second. But changing the race worked, when I changed my NPC from Imperial to Breton..

If anyone knows why this occurs and how it can be prevented I would love to know. Not sure if it may have something to do with uninstalling and then reinstalling the CS or maybe even a reinstallation of Oblivion itself. I have no idea. I always use CS 1.1 but sometimes change to 1.2 to view mods made with that CS.