Actually you don't install DesktopMates, or any MS Agent characters directly into Hal's folder. All MS Agent characters are installed into a special default character folder which is part of the MS Agent core components on your system. Hal as well as CyberBuddy, and any other MS Agent program, loads characters directly from this folder. When you select a DesktopMates character from the Hal character list and there's no preview, it's because there's no UHP file installed for it. UHP files for MS Agent characters are still required but aren't technically a character file, they only define the character so Hal knows which one to load. Hal will automatically create a UHP file for new installed MS Agent characters the first time you try loading it, but we recommend using our character plugins for Hal which will install the proper UHP files designed especially for DesktopMates characters. Character plugins for Hal are available on our Hal Plugins page.
If you copied Dawn's ACS character file into the Hal folder, I'll assure you that's not the reason why she's working, the character file can't function or be run from there, it can only function from the default MS Agent character folder, which is also where Hal is programmed to read ACS files from. The reason she probably started working is because Hal eventually created the auto UHP file which you may not have noticed until you re-started Hal.
Our Plugin page also has some interface skins available for Hal, including our latest "Blue Ice" skin which is a compact interface which was designed to use with our large DesktopMates head characters. The character remains to left of the chat window and does not overlap or interfere with the chat window and gives the illusion that the MS Agent character is independent from the Hal interface window.