How do I make a certain monster drop a certain item Like with the Cyclops Eye in PoG and make it say that the monster dropped an item and gives you a choice whether or not to pick it up and if you choose to pick it up it adds the item to your inventory?

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Go into the NPCs map section and click the "edit..." button beside the word Death. Create a dialog action and enter whatever pickup text you want. Create the two options (pick up and don't). Link the pick up option to an "item wizard" action set to "add to inventory" and with the Cyclops Eye (or whatever object you want) selected. Leave the "don't" option unlinked.

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