I honestly would prefer it in a popup window that can be resized and moved.

Furthermore, I'd also prefer not to be "locked on" the NPC that I am speaking to. I'd like to move around the NPC and if I get out of range the dialogue box just goes away. I find that more frustrating than the current box itself. Then of course when you are done with the conversation, there is this 1-2 second period where you cant move or open any menus/etc. That to me is much more pressing than designing a new box.