You need to enable sky_dialogue_experimental 1 in order to be able to select an option, beyond the fact that the overlay needs to be enabled with sky_dialogue_enable 1 in the first place.
Either do this manually through the in-game console OR open the "Mailer"-category under "Utilities" where you will find all the available customization and enabling.

The system is purely *experimental* so expect a couple of bugs.
Putting this thread here to clarify since a lot of people don't read the description thuroughly enough.