Tim Child was asked about this when the KMVR pilot was released, and we should take his word that:
One Line from the dungeoneer (arthur) was scripted.
He neglected to mention how many of the advisor's lines were scripted.
Personally, I don't believe they weren't told what to say and do. Parts of their conversation sound natural, but other parts really don't... and if they were truly left to their own devices, it probably wouldn't have produced an efficient demo of the gameplay.