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.