Alright...
For the battle system, I believe that turn based would be more work than real time. As for real time I only need to add a few lines of code to npc movement to subtract hp from the player. For turn based I would have to create a whole different interface and set it up with buttons and such.
For inventory, I'll get to work on the item system. Make items, loading items, connect items with the map so items can be on the map, then connect items with the player so the player can hold items, pick up, use, and drop items. A simple item system will probably be a bit larger to put in then the npc talking or the battle system. Though for inventory he's going to have other items besides just potions, a single armor/weapon/and trinket, right? If so we'll need to make an inventory window. If not, fine by me. Just means we are one step closer to the "Simple" part in "Simple RPG".
For npcs talking....Eh... I don't know what the talking pop up box should look like. Text, buttons, clickable text in response? X in the corner to close it? Npc sprite beside text to show you who you are talking to? If one of you would like to attempt a npc pop up text box mock-up, that would make my life so much easier in implementing it.
-Gandolf