When someone is ethereal, they are on another plane.

You cannot hear them unless if you are ethereal as well.

You cannot see them unless you are using true sight or are ethereal as well. (You can see them OOCly with blindsight, this is a bug. It is a bug that cannot be fixed.)

You cannot interact with them physically, or they with you.

Those on the ethereal plane are incorporeal, and would walk through bushes, etc. without disturbing them.
You can attack someone on the ethereal plane so long as you have a way to target them (true sight or ability to see invis), and use a spell that either has the force descriptor (isaac's missile storm) or is an abjuration spell (dispels, disjunction).

You should technically be able to attack an ethereal creature by becoming ethereal yourself, but it doesn't quite work that way in NWN2.

Despite their being proper force spells, a bug will prevent you from targeting them with force orb, bigby spells, or magic missile, I believe. Missile storm is your only real in-game choice.

- From Forum Post by Eilysia.

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