Alright, this problem is most likely spritefont's height related. Since you are using a very low resolution, you needed to reduce the dialogue height in such a way that there is not enough space to display a single line of text, meaning the system will enter in a perpetual "text overflow" mode, continually prompting the user to continue the dialogue.
I definitely did not think this would ever happen !
What you need to do is adjust things a bit so you can better use the space inside the window. First, reduce the DIALOGUE_MARGIN variable to something much less than 16. This number represent the amount of pixels between the window border and the spritefont, normally equal to the 9-patch object's margins. So you could use a low number like 2 and alter the 9-patch sprite to have a single pixel border, and adjust its margin to 2 on all sides. Second, you should probably use a spritefont better suited for such a low resolution. The font I provided with the template is 16x16, which is quite big considering your window size.