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Thanks for this - I manually dragged the scripts in until I got it to output. 

As a further question - how can I handle cutscenes with the dialogue engine (is it even possible?).

so for example I am aiming to load the dialogue when we hit specific lines in the script load in the relevant images?

switch (_scene_position) {
    case 0:
         if !textbox_exists() {
            textbox_create(
            dialogue[? "scene1"][? "line1"][? "text"],
            dialogue[? "scene1"][? "line2"][? "text"],
            dialogue[? "scene1"][? "line3"][? "text"],
            dialogue[? "scene1"][? "line4"][? "text"]);
            textbox_set("The Narrator",c_black,c_white,noone,1,fnt_main_font_good_times,spr_profile_the_narrator,true,noone,35,true);
            //textbox_set("The Narrator", c_blue,c_white,c_white,0.7,fnt_main_font_good_times,noone,true);
            //Add voice acting
            textbox_add_voice(1,true,true,
            snd_scene1_narrator_line1,
            snd_scene1_narrator_line2,
            snd_scene1_narrator_line3,
            snd_scene1_narrator_line4);
            _scene_position++;
            show_debug_message("end of line 1");
        }
        break;
    default:
        // code here
        break;
}

so iin my example here I would like to animate and fade in an image at line 3 of the dialogue? I there a way I can ask what line it is current on?

Thank you for that. As a new Gamemaker user (I am using the Gamemaker studio downloaded from steam) - I assume I can download the latest 2.3 version of the plugin? If so how do I import it to Gamemaker - as with the newer version Tools -> Import Local Package doesnt allow me to select a .yyp file.

Thanks for all your help in advance. 

Can you tell me where I can find a manual for how to use the dialog system please?