I was walking around Lower the other day, hitting the tab button out of simple boredem to see what all was around me. However I came to a startling conclusion. While I could not select the creature it said that there were two begger children walking beside each other by Speckard (or whatever his name is). But only one appeared yet it seemingly followed around the other one. In fact the other one internacted with its invisible counterpart, diespite the fact that other than its name hovering there it was non-existant.

What was going on here? Has anyone else had this bug?

That's a client-side bug; just relog or move areas and come back and the 'invisible' child should reappear.

If you don't relog, usually it's the start of a synchronisation error between client and server which may result in a crash of NwN software or your PC. Relogs fix these easily.

Interesting solution when the invisible person is part of your party: Cast invisibility on them by clicking on the portrait in the party-bar at the right of your screen, move away a bit until you cannot see them anymore. Now, when they cast off invisibility, they re-appear normally.