yes you can move on to the next chapter only if you have not used cheats to alter the char setting of you person
When you happen to use these cheats, and you try to change chapters (e.g. from the Prelude out the stables into Chapter 1) the game tells you that your character is invalid and the login is refused. To avoid this problem, find your nwnplayer.ini file in the base NWN directory. Then find the line saying "Single Player Enforce Legal Characters=1". Change that 1 to a 0, and your troubles are over.
The cheat doesn't work past version 1.65. I can't find an appropriate patch so i'd suggest anyone intending to use a modified character not apply updates to the game.