It's a known bug. Doesn't happen for everyone, but EA's been advised and they've forwarded the issue to the BioWare developers.
Here's one work-around:
(If this works for you, go to that page and give the author "XP"!)
Copy of the instructions:
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I've found a workaround that actually works, without having to reinstall.
This error only happens with Legacy installed - I was experimenting, and discovered that if you update to 1.04 without Legacy, it's fine.
Some more playing, and I have a workaround that works without killing saves:
1. go to your program files -> DA2 folder -> addins
2. In addins, find prc_drk_ something
3. inside that folder, open module
4. select the 'patch' folder, and "cut" it to the desktop
Play Sebastion's quests - it should work perfectly normally
Replace the patch folder when you are done.
You could just delete the patch folder completely, but then you won't get the dialogue fixes it got in 1.04
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