Got me the beginnings of a volcano here... https://skydrive.live.com/?cid=b60c11d037429d8e#cid=B60C11D037429D8E&id=B60C11D037429D8E%21413
...and am looking into how i can make Player and NPCs recieve damage if they walk across the lava. Help achieving this would be greatly appreciated.

Edit: Actually player damage only. Actors won't be stupid enough to walk over the lava. Guess I can achieve this by not navmeshing the molten area or some other way.

There are several ways to accomplish this I suppose? Do you have Dawnguard? They have some lava, you could look at that?

Anyway, my suggestion is to make your own water type and check the damage check-box. You can input damage-per-second here. Alternatively you could set up some trigger zone's to do fire damage. Search activators for "firedamage" you should get two trigger box's.
Hope this helps!