I am running my first game - finding it difficult to manage, my npc's are often completely invincible, to where when my players are attacking them, its not even showing in the log. I can damage them manually, and apply status effects, but none are applying automatically. This has happened on two encounters now.
Its frustrating because I can't test it until we start playing, then everyone is waiting around while I try and figure out whats wrong. If anyone has any ideas, it would be greatly appreciated!

I'm not sure what would cause the NPCs to not take damage. Is there anything different about how you added or configured those NPCs?

You should be able to start two instances of the game to be able to test the campaign yourself.
Start the game, switch to windowed mode and lower the game resolution (and maybe check the option to mute the sound volume when the game doesn't have focus), select Game Master and then Play Campaign, switch to the LAN tab and click Create (in the Lobby Settings panel, click the Connectivity button to make sure LAN is enabled and optionally disable online multiplayer, or that can be done in the options before starting the campaign).
Next, start the game again from the 'EoCApp.exe' program file (doesn't matter if the first instance is started through Steam/Galaxy or the executable), select Game Master and then Play Campaign, switch to the LAN tab and Connect.

Thanks Raze, nothing different with how I added these NPC's as far as I can remember. I will give it a test this evening, thanks for the tip! Now I can test it I will be able to figure out what I did wrong.

One thing that I am finding very amusing is that my players are literally just running around looting EVERYTHING. They got to the point where they could hardly move, they have sold as much as they can to the vendors and ended up having to drop a load of it. It doesn't seem to occur to them that just because they can pick loads of stuff up, it doesn't mean they should.

I tend to hoard things, as well. What happens if you get near the end of the game, and you need that trinket, or a stack of 200 potions to get through a tough fight?