Run the configuration program and temporarily lower the game resolution to 640x480, and switch to software rendering mode. That helps with some cut scene problems, though I think more for played video than scripted interactions.
Try deleting all of the files in the '..\Divine Divinity\Run\Dynamic' folder.
This folder is used as a cache for the game. Files are created / copied there from the save game folder when you load, and written / copied from that folder when you save a game. The files will be re-created as required the next time you start Divinity. If there was a corrupt file in that folder, deleting the files should fix the problem.
After that, reload a save before you entered the throne room, and see if the cut scene conversation with the elf continues normally.
Have you already explored the castle and done the quest for the cook? Maybe reloading a recent save and doing more things or doing things in a different order will help when it comes to the cut scene.
