In my opinion the magic mouth works better. According to Nitestar this wasn't very obvious. He asked me to change it to a modal window (Book GUI). I don't think that is suited for this purpose though.
M.
Edit: In reply to your double post, here you are assuming that the signs will use modal windows (Book GUI) which forces the players to halt and read it. Which IMO isn't suited for this purpose. However, the NPC tutorial could come first. I just don't know why it should be removed from the tutorial cave. The island is linear anyway.
M.
I double-posted so I could have only one screenie for each comment. I figured it was better to just keep everything in one post than to create multiple posts for the same topic. I didn't want to confuse the screenies, so 1 comment per screenie. :p Also, I'm writing this as I'm going through things, and really want to keep one topic per comment. Does that make sense?
As to why to do pop-up windows (the modal windows) instead of the status box:
a) It's not very noticeable,
especially for players who aren't familiar with the game. Many players won't notice this.
b) By forcing the first few instructions into modal windows, you force players to read them, or at least put it in front of their face where they can't miss it.
c) My suggestions are linear, too, as they're following the path laid out in TI--the remake.
d) I modified things slightly above; please go back and re-read the changes. As I'm writing this, I think it would make more sense.

So with the modal windows, there would be a total of three of them:
1) The welcome modal window.
2) The introduction to the NPC Tutorial modal window.
3) Instructions on how to use signs modal window.
For #3 above, as soon as the player takes its second step (off the raft, see the attached screenie), the third, and final modal window would pop-up. This window would instruct users that from this point forward, the should use the signs to get their information, and point out important parts of the screen. See the second file attached to this comment for an example of what it COULD look like.
After this third modal dialogue, the new player would now know to look in the status window box for messages. Additionally, the sign usage tutorial could be incorporated into this.
Just as a reminder throughout the TI, all signs should be as they are done to the north of the Orange tree (see 3rd screenshot), instead of regular. Especially, the sign to the north of the apple tree. But ideally, all signs should state how to use them when a player stands on them, just as a reminder.
I would also change the "Press the 'a' key to read me" to "Press the [space bar] key to read me." If there are lots of players, and other players are standing on the sign, pressing "a" could apply the players, not the sign. This could be explained later on, in the TI Cave.
Doing things this way, the "auto-display" for the first two signs one encounters along the linear path of TI could be turned off, and sign labels could just be used to guide the player. See the third screenie in this comment for an example.