Answer A) On keyboard press UP - set player animation to "walk up"
On keyboard press Down - set player animation to "walk down"
Answer B)When your game triggers your dialogue event eg: when the player goes up to a NPC and presses a button to talk, you would simply use
Player - (8 direction - set enabled = false)
this disables all input control on the 8 direction movement on the player until you call another action (like when he's done talking to the NPC - to enable it again.
Player - (8 direction - set enabled = True)