I'm near Andora and I decided to peacefully negotiate with the leader, Illium. Unfortunately, when he gets interrupted the game turns back to my other 5 party members below the cliff and then the game just stops. Well, it doesn't stop, its as if it is stuck in a cutscene mode (later, it turns out Sherincal is supposed to appear). I redid it, but it stopped again, so I decided to just go right through and destroy the Aurilites. Which is disheartening because I really do like diplomacy and I do want to know what happens. Is there any fix for this or do I just have to go on? By the way I'm using windows 7 and have the NPC mod installed.

EDIT:

I decided to try once more. I chose a different dialogue this time, the one where you intimidate Illium instead of just saying farewell after asking questions. So why does one dialogue work over the other? Is it just my game or an actual bug?

Since this is a top result in google for how to approach this diplomatically and it has zero answers, I don't care if it's a necro. If you're a random person seeing this, hopefully it helps you.

The only way to be diplomatic in this situation and avoid anyone dying is to approach it completely counterintuitively.

The druid in panther form (Odea Winterthaw) warns you not to approach the gate to Andora or they'll attack you. Then she gives you a dialog option to have an audience with Illium, which seems like it would be the polite way to get this handled. However, if you do this, Odea will die no matter what you do.

What you have to do instead is completely ignore her warning and flagrantly walk up to the front gate. Illium will initiate a conversation with you telling you that he's going to attack you, but you can just have a normal conversation with him (the exact same conversation you'd have if you got an audience through Odea). However, Odea won't be present for this conversation and it'll happen at a different location, which changes the outcome.

Now that you've completely violated their trust and approached in a hostile manner, you must also threaten to destroy them by making it seem like it would be easy for you to kill them because you laid waste to the goblins back at Targos. Illium will back down and allow you to pass, and Odea will not die. As far as I know, there's no benefit to this other than roleplay and allowing you to avoid a fight. They don't drop any good loot anyway. P.S. - you can pickpocket the belladonna from Illium, and if you disarm the glyph of warding trap outside their treasure vault, they won't go hostile when you plunder all of its goodies (including a diamond you need for the airship repair quest).

I read elsewhere that it's possible to get a discount on Beodaewn's wares by sparing the Aurilites, but I found no way to do this. They all dismiss you with no dialog options once you've secured passage. Of course, if you've already killed Beodaewn for being an evil werewolf (who clearly got all his wares from killing travelers, as evidenced by the graveyard of looted wagons near his camp), this point is a bit moot anyway.

Side note: If you decide to kill them, you get very little xp and crappy loot. The only notable drops are Illium's +2 light crossbow (statistically equivalent to a +1 heavy crossbow that you probably already have, except that it's heavier by 1 pound...) and a really terrible cloak that is only usable by druids. In other words: You're not missing much if you decide to spare them.

As for the bug this user experienced, I'm assuming it just panned the camera away from the scene where Odea gets killed for some reason. But she dies whether you choose to intimidate Illium or not in the audience scene, so that cutscene bug won't be relevant to you if you do it via the "correct" non-audience dialog.