Just wondering if there is something wrong here or if its a certain mod anyone might know of causing this...

Basically you start talking to certain NPCs, and have the dialogue options, but instead of them answering the questions, they stand there and silently mouth their responses and there is no dialogue to read either. You can hit tab and it acts as if they answered your question, which they really did, but you have no idea what they said so the next set of dialogue options really makes no sense since you don't know their response...

Doesn't happen to all NPCs, only some of them...

Thinking it might be a mod causing this, but not sure...anyone have this happen to them?

Start by looking here:

http://www.gamesas.com/topic/1413287-dialoguequest-bug-thread-3/

USKP you used to do this but that was pre 1.7, so it should not be a problem with newest patch. Are you sure though that these NPCs are not added by a mod and therefore silent?