CamDawg on the Gibberlings3 discord was kind enough to provide a fix, and has filed a pull request to implement a solution in the main branch of the mod's repository, so hopefully a general fix should be forthcoming.
To resolve the problem yourself, you need a text editor, preferably one that can count lines of code.
The steps involved are as follows:
0. Delete any .ogg files you might have copied to the game's /Sound/ folders. Those aren't going to help. Leave the ones in the mod directory, of course.
1. Open up Setup-IWDNPC.tp2 in your text editor of choice. It'll be in the /iwdnpc/ mod folder in your game directory. Personally I like Notepad++, which is free and I find to be fairly intuitive.
2. Find the location of the following code block (should start at line 805 or so):
"ACTION_IF ("%WEIDU_OS%" STRING_EQUAL_CASE ~WIN32~ = 1) THEN BEGIN // Windows
AT_NOW ~IWDNPC/Audio/AudioInstall.bat~
AT_UNINSTALL ~IWDNPC/Audio/AudioUninstall.bat~
END
ACTION_IF ("%WEIDU_OS%" STRING_EQUAL_CASE ~OSX~ = 1) THEN BEGIN // OSX
AT_NOW ~IWDNPC/Audio/iwdnpc-installaudio-osx.sh~
AT_UNINSTALL ~IWDNPC/Audio/iwdnpc-removeaudio-osx.sh~
END"
3. Replace the code in the block with the following:
"// Install audio files
LAF HANDLE_AUDIO STR_VAR oggdec_path = ~iwdnpc/audio~ sox_path = ~iwdnpc/audio~ audio_path = ~iwdnpc/audio~ END
LAF HANDLE_AUDIO STR_VAR oggdec_path = ~iwdnpc/audio~ sox_path = ~iwdnpc/audio~ audio_path = ~iwdnpc/sounds/o#holvir~ output_path = ~sounds/o#holvir~ END
LAF HANDLE_AUDIO STR_VAR oggdec_path = ~iwdnpc/audio~ sox_path = ~iwdnpc/audio~ audio_path = ~iwdnpc/sounds/o#korin~ output_path = ~sounds/o#korin~ END
LAF HANDLE_AUDIO STR_VAR oggdec_path = ~iwdnpc/audio~ sox_path = ~iwdnpc/audio~ audio_path = ~iwdnpc/sounds/o#nella~ output_path = ~sounds/o#nella~ END
LAF HANDLE_AUDIO STR_VAR oggdec_path = ~iwdnpc/audio~ sox_path = ~iwdnpc/audio~ audio_path = ~iwdnpc/sounds/o#severn~ output_path = ~sounds/o#severn~ END
LAF HANDLE_AUDIO STR_VAR oggdec_path = ~iwdnpc/audio~ sox_path = ~iwdnpc/audio~ audio_path = ~iwdnpc/sounds/o#teri~ output_path = ~sounds/o#teri~ END"
4. Save the file, making sure to not save it with any extension other than what it had. Notepad++ will claim it's saving it as a text file, but shouldn't change the format
5. Use the mod's setup file to un-install the mod.
6. Re-install the mod with the setup file.
7. Either start a new game and generate new characters with the appropriate custom soundsets chosen, or go to your savegame featuring the NPCs and go to the character screen, hit customize, and choose the custom soundsets for that character. The sounds should play if you've done this all correctly.
That worked well for me. You may still have to fiddle with the game's config utility or reinstall other mods afterward, but that's about it so far.