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Staff on this MUX do play characters, both PC and NPC.
The restriction on a PC for staff is that staff is forbidden from playing any character above stock chargen in a sphere in which they staff. This means that while a shifter staffer can play a stock-plus character in the vampire sphere, they cannot play anything in the shifter sphere above standard chargen.
NPCs fall into two basic categories: Long term and short term.
Long Term NPCs are the sphere leadership roles: Camarilla Prince, Sabbat Bishop, Garou and BSD Alphas. These characters are played by staff, and remain for the sake of continuity. Should the staffer playing the NPC step down from staffing, the character will remain, and be played by another staffer. There might also be other long term NPCs, usually somewhere in the hierarchy of the particular sphere. Sept Warder and Camarilla Archon, are examples. While they might not be seen on a regular basis, they're kept around for when the story needs them.
Short Term NPCs are typically around for a particular TP, or set of TPs. Sometimes the NPC is meant to be defeated, sometimes the NPC is meant to provide information to further the plot.
In both categories, in some cases, the NPC isn't going to be identified as such, but in all such cases, the NPC will be of stock chargen level. These will typically be characters meant to further the story in some subtle manner.
Additionally, there will be "named NPCs" that will not actually show up on the grid. These are typically going to be NPCs that are around, but not intricately part of the story: members of the City Council, for example.
If you have any questions, write to *wizards.