Well I had another go. Still not got past the woman though. To be honest I'm having a hard time with the pixel hunting. The interaction polygons you have created seem to be really small & most things don't exactly stand out in the scene & scream at you come pick me up or interact with me.
A hotspot system would be a very welcome addition.
In regards to your rotation / walk thing. I see why you are not happy with it, but it's something that you could actually fix yourself. You need to start the walk animation with the closest frame to one of your feet, instead you seem to be starting mid-stride which is why it snaps from rotation to both feet spread quite far apart.
Also while multi-clicking around the scene with left click it often seems to reset the walk animation, as the rotation script is too slow in calculating if it should carry on walking or not.
I've also had a thought to the multi-playing voices... Create a single condition. Name it something like: "char_talking" & set to false. Next inside of all the action blocks where you trigger a play sound when he's supposed to talk, wrap the actions in an if query like so...
if condition "char_talking" is false
change condition "char_talking" to true
play sound "x"
wait until sound "x" stops
change condition "char_talking" to false
end if
... this will prevent the actions from being triggered while the condition is set to true.
My next main issue is that you have used left click immediate for pretty much everything. May I recommend using right click immediate instead for the observation actions? Left click immediate may override all left button related actions in the action list of an object depending on where in the list it is placed.
Moving on. I find it cumbersome to have to press the space bar to access the inventory. Speaking of space bar, you have used the wrong key action. You should be using the space (released) key action instead. The regular key actions work like the turbo function of a gamepad - keep hold of space bar * you'll see what I mean. I believe space should be reserved for the hotspot system. I also think it might be more beneficial to make your inventory fade in or slide up when you move the mouse cursor to the bottom-center of the screen.
I can't think of anything else at the minute.
* ah yeah... I found it confusing that the inventory bag icon doesn't actually open / close the inventory & also confused as to the reason why it takes me to the menu when I click on it while inventory is closed.