I did lots today, but I'm completely exhausted. Too much so to write about it all. So here's a low quality 20 second webm video. There's a lot going on here.
(The running looks weird because of the way the timing is going during capture. It doesn't look quite so flail-y in game.)
tl;dr lots more inventory polish, labels on items you walk over, (stackable) ammo items, money items (fuses!), and melee weapons (knife and lead pipe). Enemies with guns will chase you with their melee weapons.
Ugh, I'm trying to push through this writers block. I hurt my foot this weekend, and you'd think being stuck in place would force me to work more, but it just has drained all of my creative energy at the time I needed it the most. Tonight I was able to sit down and start messing with the intro dialog at least. I found out the conversation system actually only lets ai characters have speaking roles, and I kind of wanted Erik to have a little bit of internal monologue at the beginning before subjecting him to the complexities of the conversation system. I've hacked around it but it's pretty messy code. The biggest change is that conversations can now follow their speaker: the player can still move around while Erik is speaking like any convo, so it still doesn't break the flow of the rest of the game.
Now that I have internal monolog I think I'll probably use it elsewhere and not just in the intro.