-Download the plugin and decompress it.
-Cut/paste the InCharacter.dll file into your toolset plugin folder. It is probably something like:
C:\Program Files\Atari\Neverwinter Nights 2\NWN2Toolset\Plugins
Not to be confused with where your user data are stored, which is probably something like:
C:\Users\Username\Documents\Neverwinter Nights 2
-Open the toolset.
-Create or open a module to edit your .bic in.
-If you have not used plugins before, click View--->Options
-A window will open that will have a number of options. The one you want is under "Security". There is a little "plugins" menu. Change the menu so that it says "Load all Plugins"
-Almost there now! Click OK to save your selection and close the window. Then open the Plugin menu. InCharacter should be there. Click it, and you will get the option to import or export a .bic.
-Click import, browse to the directory where your .bic file is located, and import the PC. I would probably click the "Strip Items" option, by the way.
-Your PC is now an NPC, which you can edit as you would any other NPC. You can add wings, a tail, VFX, inventory items, alter stats, et cetera. You can change the appearance to any in game appearance this way, like a dragon or balor.
-When you are done, click on InCharacter to export the NPC as a .bic.
Done!
Hope this helps.
--Ravel