diff --git a/index.html b/index.html
index a049faa..f024591 100644
--- a/index.html
+++ b/index.html
@@ -107,7 +107,7 @@
     <div class="popup-overlay"></div>
 
     <!-- Main Game JavaScript Module -->
-    <script type="module" src="js/main.js?v=33"></script>
+    <script type="module" src="js/main.js?v=40"></script>
     
     <!-- Mobile touch handling -->
     <script>
diff --git a/js/core/game.js b/js/core/game.js
index fd95458..0bf490f 100644
--- a/js/core/game.js
+++ b/js/core/game.js
@@ -2,7 +2,7 @@ import { initializeRooms, calculateWorldBounds, calculateRoomPositions, createRo
 import { createPlayer, updatePlayerMovement, movePlayerToPoint, player } from './player.js?v=7';
 import { initializePathfinder } from './pathfinding.js?v=7';
 import { initializeInventory, processInitialInventoryItems } from '../systems/inventory.js?v=8';
-import { checkObjectInteractions, setGameInstance } from '../systems/interactions.js?v=23';
+import { checkObjectInteractions, setGameInstance } from '../systems/interactions.js?v=25';
 import { introduceScenario } from '../utils/helpers.js?v=19';
 import '../minigames/index.js?v=2';
 import SoundManager from '../systems/sound-manager.js?v=1';
diff --git a/js/core/rooms.js b/js/core/rooms.js
index 760cffd..d936d58 100644
--- a/js/core/rooms.js
+++ b/js/core/rooms.js
@@ -49,7 +49,7 @@ import { initializeDoors, createDoorSpritesForRoom, checkDoorTransitions, update
 import { initializeObjectPhysics, setupChairCollisions, setupExistingChairsWithNewRoom, calculateChairSpinDirection, updateSwivelChairRotation, updateSpriteDepth } from '../systems/object-physics.js';
 import { initializePlayerEffects, createPlayerBumpEffect, createPlantBumpEffect } from '../systems/player-effects.js';
 import { initializeCollision, createWallCollisionBoxes, removeTilesUnderDoor, removeWallTilesForDoorInRoom, removeWallTilesAtWorldPosition } from '../systems/collision.js';
-import NPCSpriteManager from '../systems/npc-sprites.js';
+import NPCSpriteManager from '../systems/npc-sprites.js?v=3';
 
 export let rooms = {};
 export let currentRoom = '';
diff --git a/js/main.js b/js/main.js
index 73e43d2..954c6ad 100644
--- a/js/main.js
+++ b/js/main.js
@@ -1,5 +1,5 @@
 import { GAME_CONFIG } from './utils/constants.js?v=8';
-import { preload, create, update } from './core/game.js?v=32';
+import { preload, create, update } from './core/game.js?v=39';
 import { initializeNotifications } from './systems/notifications.js?v=7';
 // Bluetooth scanner is now handled as a minigame
 // Biometrics is now handled as a minigame
diff --git a/js/minigames/index.js b/js/minigames/index.js
index cc5ec0e..d34bb2e 100644
--- a/js/minigames/index.js
+++ b/js/minigames/index.js
@@ -10,7 +10,7 @@ export { BluetoothScannerMinigame, startBluetoothScannerMinigame } from './bluet
 export { BiometricsMinigame, startBiometricsMinigame } from './biometrics/biometrics-minigame.js';
 export { ContainerMinigame, startContainerMinigame, returnToContainerAfterNotes } from './container/container-minigame.js';
 export { PhoneChatMinigame, returnToPhoneAfterNotes } from './phone-chat/phone-chat-minigame.js';
-export { PersonChatMinigame } from './person-chat/person-chat-minigame.js';
+export { PersonChatMinigame } from './person-chat/person-chat-minigame.js?v=7';
 export { PinMinigame, startPinMinigame } from './pin/pin-minigame.js';
 export { PasswordMinigame } from './password/password-minigame.js';
 export { TextFileMinigame, returnToTextFileAfterNotes } from './text-file/text-file-minigame.js';
@@ -58,7 +58,7 @@ import { ContainerMinigame, startContainerMinigame, returnToContainerAfterNotes
 import { PhoneChatMinigame, returnToPhoneAfterNotes } from './phone-chat/phone-chat-minigame.js';
 
 // Import the person chat minigame (In-person NPC conversations)
-import { PersonChatMinigame } from './person-chat/person-chat-minigame.js';
+import { PersonChatMinigame } from './person-chat/person-chat-minigame.js?v=2';
 
 // Import the PIN minigame
 import { PinMinigame, startPinMinigame } from './pin/pin-minigame.js';
diff --git a/js/minigames/person-chat/person-chat-minigame.js b/js/minigames/person-chat/person-chat-minigame.js
index a58bf5d..c5fab04 100644
--- a/js/minigames/person-chat/person-chat-minigame.js
+++ b/js/minigames/person-chat/person-chat-minigame.js
@@ -17,6 +17,7 @@ import PersonChatUI from './person-chat-ui.js';
 import PhoneChatConversation from '../phone-chat/phone-chat-conversation.js'; // Reuse phone-chat conversation logic
 import InkEngine from '../../systems/ink/ink-engine.js?v=1';
 import { processGameActionTags, determineSpeaker as determineSpeakerFromTags } from '../helpers/chat-helpers.js';
+import npcConversationStateManager from '../../systems/npc-conversation-state.js?v=2';
 
 export class PersonChatMinigame extends MinigameScene {
     /**
@@ -200,9 +201,22 @@ export class PersonChatMinigame extends MinigameScene {
                 return;
             }
             
-            // Navigate to start knot
-            const startKnot = this.npc.currentKnot || 'start';
-            this.conversation.goToKnot(startKnot);
+            // Restore previous conversation state if it exists
+            const stateRestored = npcConversationStateManager.restoreNPCState(
+                this.npcId, 
+                this.inkEngine.story
+            );
+            
+            if (stateRestored) {
+                // If we restored state, reset the story ended flag in case it was marked as ended before
+                this.conversation.storyEnded = false;
+                console.log(`🔄 Continuing previous conversation with ${this.npcId}`);
+            } else {
+                // First time conversation - navigate to start knot
+                const startKnot = this.npc.currentKnot || 'start';
+                this.conversation.goToKnot(startKnot);
+                console.log(`🆕 Starting new conversation with ${this.npcId}`);
+            }
             
             this.isConversationActive = true;
             
@@ -246,26 +260,35 @@ export class PersonChatMinigame extends MinigameScene {
             console.log(`🗣️ showCurrentDialogue - this.ui exists:`, !!this.ui);
             console.log(`🗣️ showCurrentDialogue - this.ui.showDialogue exists:`, typeof this.ui?.showDialogue);
             
-            // Display dialogue text with speaker (only if there's actual text)
-            if (result.text && result.text.trim()) {
-                console.log(`🗣️ Calling showDialogue with speaker: ${speaker}`);
-                this.ui.showDialogue(result.text, speaker);
-            } else {
-                console.log(`⚠️ Skipping showDialogue - no text or text is empty`);
-            }
-            
-            // Display choices if available
+            // Display choices if available (check this first, before text)
             if (result.choices && result.choices.length > 0) {
+                // At a choice point - display choices
                 this.ui.showChoices(result.choices);
                 console.log(`📋 ${result.choices.length} choices available`);
-            } else if (result.canContinue) {
-                // No choices but can continue - auto-advance after delay
-                console.log('⏳ Auto-continuing in 2 seconds...');
-                setTimeout(() => this.showCurrentDialogue(), 2000);
+                
+                // Also display any accompanying text if present
+                if (result.text && result.text.trim()) {
+                    console.log(`🗣️ Calling showDialogue with speaker: ${speaker}`);
+                    this.ui.showDialogue(result.text, speaker);
+                }
+            } else if (result.text && result.text.trim()) {
+                // Have text but no choices - display and continue
+                console.log(`🗣️ Calling showDialogue with speaker: ${speaker}`);
+                this.ui.showDialogue(result.text, speaker);
+                
+                if (result.canContinue) {
+                    // Can continue - auto-advance after delay
+                    console.log('⏳ Auto-continuing in 2 seconds...');
+                    setTimeout(() => this.showCurrentDialogue(), 2000);
+                } else {
+                    // Can't continue but have text - story will end
+                    console.log('✓ Waiting for story to end...');
+                    setTimeout(() => this.endConversation(), 1000);
+                }
             } else {
-                // No choices and can't continue - story will end
-                console.log('✓ Waiting for story to end...');
-                setTimeout(() => this.endConversation(), 1000);
+                // No text and no choices - story has ended
+                console.log('🏁 No text and no choices - story ended');
+                this.endConversation();
             }
         } catch (error) {
             console.error('❌ Error showing dialogue:', error);
@@ -369,6 +392,12 @@ export class PersonChatMinigame extends MinigameScene {
             return;
         }
         
+        // Process any game action tags (give_item, unlock_door, etc.) BEFORE displaying dialogue
+        if (result.tags && result.tags.length > 0) {
+            console.log('🏷️ Processing action tags from accumulated dialogue:', result.tags);
+            processGameActionTags(result.tags, this.ui);
+        }
+        
         // Split text into lines
         const lines = result.text.split('\n').filter(line => line.trim());
         
@@ -561,6 +590,11 @@ export class PersonChatMinigame extends MinigameScene {
         
         this.isConversationActive = false;
         
+        // Save the conversation state before ending
+        if (this.inkEngine && this.inkEngine.story) {
+            npcConversationStateManager.saveNPCState(this.npcId, this.inkEngine.story);
+        }
+        
         // Show completion message
         if (this.ui.elements.dialogueText) {
             this.ui.elements.dialogueText.textContent = 'Conversation ended.';
@@ -575,6 +609,21 @@ export class PersonChatMinigame extends MinigameScene {
         }, 1000);
     }
     
+    /**
+     * Override cleanup to ensure conversation state is saved
+     * This is called by the base class before the minigame is removed
+     */
+    cleanup() {
+        // Save conversation state before cleanup
+        if (this.isConversationActive && this.inkEngine && this.inkEngine.story) {
+            console.log(`💾 Saving NPC state on cleanup for ${this.npcId}`);
+            npcConversationStateManager.saveNPCState(this.npcId, this.inkEngine.story);
+        }
+        
+        // Call parent cleanup
+        super.cleanup();
+    }
+    
     /**
      * Show error message
      * @param {string} message - Error message to display
diff --git a/js/minigames/person-chat/person-chat-portraits-old.js b/js/minigames/person-chat/person-chat-portraits-old.js
index d160995..16d1cd8 100644
--- a/js/minigames/person-chat/person-chat-portraits-old.js
+++ b/js/minigames/person-chat/person-chat-portraits-old.js
@@ -28,7 +28,7 @@ export default class PersonChatPortraits {
         // Portrait settings
         this.portraitWidth = 200;   // Portrait display size
         this.portraitHeight = 250;
-        this.zoomLevel = 4;         // 4x zoom on sprite
+        this.zoomLevel = 2;         // 2x zoom on sprite
         this.updateInterval = 100;  // Update portrait every 100ms during conversation
         
         // State
@@ -38,6 +38,7 @@ export default class PersonChatPortraits {
         this.gameCanvas = null;
         
         console.log(`🖼️ Portrait renderer created for NPC: ${npc.id}`);
+        alert('Portrait renderer created for NPC: ' + npc.id);
     }
     
     /**
diff --git a/js/systems/interactions.js b/js/systems/interactions.js
index 3d68e97..954e184 100644
--- a/js/systems/interactions.js
+++ b/js/systems/interactions.js
@@ -277,8 +277,8 @@ export function checkObjectInteractions() {
                         }
                     } else if (sprite.interactionIndicator && !sprite.talkIconVisible) {
                         // Update position of talk icon to stay pixel-perfect on NPC
-                        const iconX = Math.round(sprite.x + 0);
-                        const iconY = Math.round(sprite.y - 48);
+                        const iconX = Math.round(sprite.x + 5);
+                        const iconY = Math.round(sprite.y - 38);
                         sprite.interactionIndicator.setPosition(iconX, iconY);
                         sprite.interactionIndicator.setVisible(true);
                         sprite.talkIconVisible = true;
@@ -293,8 +293,8 @@ export function checkObjectInteractions() {
                     }
                 } else if (sprite.interactionIndicator && sprite.talkIconVisible) {
                     // Update position even when not highlighted (for smooth following)
-                    const iconX = Math.round(sprite.x + 0);
-                    const iconY = Math.round(sprite.y - 48);
+                    const iconX = Math.round(sprite.x + 5);
+                    const iconY = Math.round(sprite.y - 38);
                     sprite.interactionIndicator.setPosition(iconX, iconY);
                 }
             });
@@ -363,13 +363,11 @@ function addInteractionIndicator(obj) {
     if (obj._isNPC) {
         try {
             // Talk icon positioned above NPC with pixel-perfect coordinates
-            const talkIconX = Math.round(obj.x + 0); // Centered above
-            const talkIconY = Math.round(obj.y - 48); // 48 pixels above
+            const talkIconX = Math.round(obj.x + 5); // Centered above
+            const talkIconY = Math.round(obj.y - 38); // 32 pixels above
             
             const indicator = obj.scene.add.image(talkIconX, talkIconY, 'talk');
             indicator.setDepth(obj.depth + 1);
-            indicator.setOrigin(0.5, 0.5);
-            indicator.setScale(0.75); // Slightly smaller than full size
             indicator.setVisible(false); // Hidden until player is in range
             
             // Store reference for cleanup and visibility management
diff --git a/js/systems/npc-conversation-state.js b/js/systems/npc-conversation-state.js
new file mode 100644
index 0000000..d07f045
--- /dev/null
+++ b/js/systems/npc-conversation-state.js
@@ -0,0 +1,121 @@
+/**
+ * NPC Conversation State Manager
+ * 
+ * Persists NPC conversation state (Ink variables, choices, progress) across multiple conversations.
+ * Stores serialized story state so NPCs remember their relationships and story progression.
+ * 
+ * @module npc-conversation-state
+ */
+
+class NPCConversationStateManager {
+    constructor() {
+        this.conversationStates = new Map(); // { npcId: { storyState, variables, ... } }
+        console.log('🗂️ NPC Conversation State Manager initialized');
+    }
+
+    /**
+     * Save the current state of an NPC's conversation
+     * @param {string} npcId - NPC identifier
+     * @param {Object} story - The Ink story object
+     */
+    saveNPCState(npcId, story) {
+        if (!npcId || !story) return;
+
+        try {
+            // Serialize the story state (includes all variables and progress)
+            // Use uppercase ToJson as per inkjs API
+            const storyState = story.state.ToJson();
+            
+            const state = {
+                storyState: storyState,
+                timestamp: Date.now()
+            };
+
+            this.conversationStates.set(npcId, state);
+            console.log(`💾 Saved conversation state for NPC: ${npcId}`, {
+                timestamp: new Date(state.timestamp).toLocaleTimeString()
+            });
+        } catch (error) {
+            console.error(`❌ Error saving NPC state for ${npcId}:`, error);
+        }
+    }
+
+    /**
+     * Restore the state of an NPC's conversation
+     * @param {string} npcId - NPC identifier
+     * @param {Object} story - The Ink story object to restore into
+     * @returns {boolean} True if state was restored
+     */
+    restoreNPCState(npcId, story) {
+        if (!npcId || !story) return false;
+
+        const state = this.conversationStates.get(npcId);
+        if (!state) {
+            console.log(`ℹ️ No saved state for NPC: ${npcId} (first conversation)`);
+            return false;
+        }
+
+        try {
+            // Restore the serialized story state
+            // Use uppercase LoadJson as per inkjs API
+            story.state.LoadJson(state.storyState);
+            
+            console.log(`✅ Restored conversation state for NPC: ${npcId}`, {
+                savedAt: new Date(state.timestamp).toLocaleTimeString()
+            });
+            
+            return true;
+        } catch (error) {
+            console.error(`❌ Error restoring NPC state for ${npcId}:`, error);
+            return false;
+        }
+    }
+
+    /**
+     * Get the current state for an NPC (for debugging)
+     * @param {string} npcId - NPC identifier
+     * @returns {Object|null} Conversation state or null if not found
+     */
+    getNPCState(npcId) {
+        return this.conversationStates.get(npcId) || null;
+    }
+
+    /**
+     * Clear the state for an NPC (useful for resetting conversations)
+     * @param {string} npcId - NPC identifier
+     */
+    clearNPCState(npcId) {
+        if (this.conversationStates.has(npcId)) {
+            this.conversationStates.delete(npcId);
+            console.log(`🗑️ Cleared conversation state for NPC: ${npcId}`);
+        }
+    }
+
+    /**
+     * Clear all NPC states (useful for scenario reset)
+     */
+    clearAllStates() {
+        const count = this.conversationStates.size;
+        this.conversationStates.clear();
+        console.log(`🗑️ Cleared all NPC conversation states (${count} NPCs)`);
+    }
+
+    /**
+     * Get list of NPCs with saved state
+     * @returns {Array<string>} Array of NPC IDs with persistent state
+     */
+    getSavedNPCs() {
+        return Array.from(this.conversationStates.keys());
+    }
+}
+
+// Create global instance
+const npcConversationStateManager = new NPCConversationStateManager();
+
+// Export for use in modules
+export default npcConversationStateManager;
+
+// Also attach to window for global access
+if (typeof window !== 'undefined') {
+    window.npcConversationStateManager = npcConversationStateManager;
+}
diff --git a/js/systems/npc-sprites.js b/js/systems/npc-sprites.js
index f666142..babb19b 100644
--- a/js/systems/npc-sprites.js
+++ b/js/systems/npc-sprites.js
@@ -49,9 +49,9 @@ export function createNPCSprite(scene, npc, roomData) {
         // Enable physics
         scene.physics.add.existing(sprite);
         sprite.body.immovable = true; // NPCs don't move on collision
-        // Set smaller collision box at the feet (matching player collision: 15x10 with similar offset)
-        sprite.body.setSize(15, 10); // Collision body size (matches player)
-        sprite.body.setOffset(25, 50); // Offset for feet position (64px sprite, same as player)
+        // Set smaller collision box at the feet (matching player collision: 18x10 with similar offset)
+        sprite.body.setSize(18, 10); // Collision body size (wider for better hit detection)
+        sprite.body.setOffset(23, 50); // Offset for feet position (64px sprite, adjusted for wider box)
         
         // Set up animations
         setupNPCAnimations(scene, sprite, spriteSheet, config, npc.id);
diff --git a/js/systems/npc-talk-icons.js b/js/systems/npc-talk-icons.js
index e1c049d..b4487ab 100644
--- a/js/systems/npc-talk-icons.js
+++ b/js/systems/npc-talk-icons.js
@@ -12,7 +12,7 @@ export class NPCTalkIconSystem {
         this.scene = scene;
         this.npcIcons = new Map(); // { npcId: { npc, icon, sprite } }
         // Offset from NPC position - use whole pixels to avoid sub-pixel rendering
-        this.ICON_OFFSET = { x: 0, y: 0 }; 
+        this.ICON_OFFSET = { x: 0, y: -33 }; 
         this.INTERACTION_RANGE = 64; // Pixels
         this.UPDATE_INTERVAL = 200; // ms between updates
         this.lastUpdate = 0;
diff --git a/server.py b/server.py
index 6a68d05..e0eaefd 100644
--- a/server.py
+++ b/server.py
@@ -1,9 +1,7 @@
 #!/usr/bin/env python3
 """
-HTTP Server with proper cache headers for development
-- JSON files: No cache (always fresh)
-- JS/CSS: Short cache (1 hour)
-- Static assets: Longer cache (1 day)
+HTTP Server with zero caching for development
+- ALL files: No cache (always fresh)
 """
 
 import http.server
@@ -17,36 +15,17 @@ PORT = 8000
 
 class NoCacheHTTPRequestHandler(http.server.SimpleHTTPRequestHandler):
     def end_headers(self):
-        now = datetime.utcnow()
-        
-        # Get the file path
-        file_path = self.translate_path(self.path)
-        
-        # Set cache headers based on file type
-        if self.path.endswith('.json'):
-            # JSON files: Always fresh (no cache)
-            self.send_header('Cache-Control', 'no-cache, no-store, must-revalidate, max-age=0')
-            self.send_header('Pragma', 'no-cache')
-            self.send_header('Expires', '0')
-            # IMPORTANT: Override Last-Modified BEFORE calling parent end_headers()
-            self.send_header('Last-Modified', formatdate(timeval=None, localtime=False, usegmt=True))
-        elif self.path.endswith(('.js', '.css')):
-            # JS/CSS: Cache for 1 hour (development)
-            self.send_header('Cache-Control', 'public, max-age=3600')
-        elif self.path.endswith(('.png', '.jpg', '.jpeg', '.gif', '.svg', '.webp')):
-            # Images: Cache for 1 day
-            self.send_header('Cache-Control', 'public, max-age=86400')
-        else:
-            # HTML and other files: No cache
-            self.send_header('Cache-Control', 'no-cache, no-store, must-revalidate, max-age=0')
-            self.send_header('Pragma', 'no-cache')
-            self.send_header('Expires', '0')
+        # Disable all caching for ALL file types
+        self.send_header('Cache-Control', 'no-cache, no-store, must-revalidate, max-age=0, private')
+        self.send_header('Pragma', 'no-cache')
+        self.send_header('Expires', '0')
+        self.send_header('Last-Modified', formatdate(timeval=None, localtime=False, usegmt=True))
         
         # Add CORS headers for local development
         self.send_header('Access-Control-Allow-Origin', '*')
         self.send_header('Access-Control-Allow-Methods', 'GET, OPTIONS')
         
-        # Call parent to add any remaining headers (this will NOT override ours)
+        # Call parent to add any remaining headers
         super().end_headers()
 
 if __name__ == '__main__':
@@ -54,11 +33,7 @@ if __name__ == '__main__':
     
     with socketserver.TCPServer(("", PORT), Handler) as httpd:
         print(f"🚀 Development Server running at http://localhost:{PORT}/")
-        print(f"📄 Cache policy:")
-        print(f"  - JSON files: No cache (always fresh)")
-        print(f"  - JS/CSS: 1 hour cache")
-        print(f"  - Images: 1 day cache")
-        print(f"  - Other: No cache")
+        print(f"📄 Cache policy: ZERO CACHING - all files always fresh")
         print(f"\n⌨️  Press Ctrl+C to stop")
         try:
             httpd.serve_forever()