I have the same problem with handing npc items. The NPC interface is just too complicated to work on broad level. What needs to be typed needs to be more explicit or should move to mouse selection interface like rappelz. Just in doing the tutorial I can't give the blacksmithing book. I have it but she won't move on. The problem is that although the game says don't be frustrated, its frustrating and therefore hurts the gameplay, because you spend more time trying to figure out what to type than playing the game.
Maybe until quests are working... There should be a way to restart a quest which basically removes all progress to that point and lets you start again. More like remove, not quite, then you could get down to one quest if that were causing issues, and if you lost items, you would be able to get them again. Stinks to start over, but better than not being able to finish.
