Yes it happens while the game is running, but also before and after it does, though I think it may resolve itself after running it? I will have to fiddle around again with it to see when/how it pops up; thanks for continuing to round out the edges of the game engine!
Quick update, you can type and such in the dialog editor while test playing; however, if you use the WASD keys your character moves, along you you not being able to move the cursor in the text (it only moves your character)