Glad to hear that it works better with the local host! I doubt it was the internet speed though, keep in mind that a lot of people use those models. Even the paid ones have their fair share of work.
If you are using LM Studio at its' default settings, it will automatically throw out the excessive memory once it nears the limit. The default setting for that is that the AI throws out the middle part, keeping the start (with the world rules) and the more recent prompts in memory.
For the weird sentence endings, you can try adding something like this to your prompt maybe? I got this from ChatGPT and it sounds like it should work.
> Only describe events, actions, and dialogue that are relevant to the player's current situation. Maintain an open-ended format.
As for the kobolds, something like this in the AI section of their entity entry should do the trick:
> The kobolds always address everybody in third person. Even when they talk about another of their kind, they use third person only.