A player character (PC) is a character run by a player, who directly decides the character's actions. They are distinguished from Dungeon Master avatars (who are not considered actual characters in the story) and non-player characters, who are run by the computer if not possessed by a Dungeon Master.
PCs have a greater persistence than an individual game, and for the most part, PCs can carry over items and experience between modules. A PC's progression is independently tracked and maintained over the course of his or her adventuring life. However, for story and game play reasons, some modules will disallow certain types of items, and some are directed towards characters of certain levels. Some modules will take this to the point of removing all items from entering PCs (perhaps allowing those items to be recovered as the module ends) and possibly forcing an entering PC to a certain level.
The files tracking player characters between modules (not in saved games) have the .bic extension and are stored in the local vault or server vault as appropriate. Server vault applies only to multiplayer, and the characters in a server vault are further categorized by player name (meaning that each player name becomes a subdirectory of the server vault directory).
Players are able to create nearly any desired type of character from the options available in the third edition of the Dungeons & Dragons ruleset. This includes seven races, eleven classes (to start with), and a wide variety of skills and heroic feats with which to further customize the statistics and abilities of a character. Visually, the choice of race has the biggest impact on the look of a character. This appearance can be further customized by choosing a body type (normal or large), a suitable head, and the colors of the skin, hair, and tattoos. There is also a selection of portraits and voice sets to choose from. Beyond this, there is a large number of parts for clothing (including armor) that can be combined, allowing for billions of unique looks (before accounting for the choices of major and minor cloth, leather, and metal colors). BioWare wants the characters in Neverwinter Nights to be as unique and varied as the people that play them.
Another customization aspect is a character's alignment. Players can choose from any of the nine traditional D&D alignments; the choices between law and chaos, good and evil are in the hands of the player. However, the alignment specified at character creation may mean little if it is not roleplayed. (For example, while a player may choose an evil alignment, non-player characters will not, for the most part, take one look and realize that the PC is evil. Rather, it would be the PC's actions – such as senselessly slaughtering a city – that could have an impact on non-player character reactions.)
This freedom of customization follows in the wake of BioWare's Baldur's Gate series, and initially BioWare had hoped to allow Baldur's Gate characters to transfer over to Neverwinter Nights. However, given the completely different rules, engine, graphics, and character attributes, such a transfer would mean stripping an old character of all items, experience, and level bonuses, leaving the old character with just their name. Seeing no point in this process, BioWare in the end decided against the ability to transfer characters.