Again, I believe that in Edwards's Story Now, something needs to be at stake for the character (or player), and now in the decision to spare the kobolds or not. C1 knowing in the moment that there will be a specific future consequence, such as losing the support of their order, may suffice, but ideally for Story Now some bigwig of that order will be present on the scene (for example), and the screws can be turned further if that bigwig has just been shown to be not at all innocent. Maybe they show up and just whack a human NPC on the blatantly false assumption they've been collaborating with the kobolds.What?! It's not about the kobolds? I can't follow how you arrive at that. The questions raised are raised because they are questions for the characters. Reciprocally, I don't see how you miss the protagonism there.
To join the dots. We have two characters C1 and C2 in worlds W1 and W2. C1 has a prior commitment to "never harm innocents" or something like that, in tension with their duty to "protect the points of light". C2 lacks the first prior commitment.
In W1, C1 had to decide what way to resolve the conflict. Okay, they spare the kobolds. The piper to be paid is likely some problem now or down the line with protecting the points of light, their order, whatever. It's fundamentally who they are and what they want.
In W2, C2 decides to spare the kobolds. They lacked a prior commitment but nothing prevents them learning something about themselves and that being true going forward. They realise that protecting points of light is not as important to them as their newfound awareness that they cannot bring themselves to harm innocents. This is a golden opportunity for the piper to play a tune. It's fundamentally about who they will become and hereon what they will want.
[EDIT And to spell it out, alignments provide context or grounding for players to decide whether they have those sorts of commitments. Good for example makes it likely a character will discover in themselves an aversion to harming innocents.]
For C2, nothing is at stake so there's no Story Now going on. Their decision may lay the ground for a later Story Now-type moment, however, as you indicate.
I'd like to reiterate that these modes of play are momentary, and that saying a game or a player is GNS Narrativist is really a shorthand for "features/prefers primarily* moments of GNS-Narrative play". I believe it's possible to embed Story Now moments in otherwise primarily GNS High-Concept Simulationist, or other, play—but you want to know which is which, the specific ways in which they differ, and how much of each all the folks at the table prefer.
* "Primarily" can be stretched toward "exclusively", but I have a strong suspicion there are limits there.
Edits for clarity.
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