In general in play they were ignored or just treated as an abstract language with no further comment.
As to where they came from, here's an answer from Gary Gygax on Dragonsfoot!
As D&D was being quantified and qualified by the publication of the supplemental rules booklets. I decided that Thieves' cant should not be the only secret language. Thus alignment languages come into play, the rational [sic] being they were akin to Hebrew for Jewish and Latin for Roman Catholic persons.
I have since regretted the addition, as the non-cleric user would have only a limited vocabulary, and little cound [sic] be conveyed or understoon [sic] by the use of an alignment language between non-clerical users.
If the DMs would have restricted the use of alignment languages--done mainly because I insisted on that as I should have--then the concept is vaible [sic]. In my view the secret societies of alignment would be pantheonic, known to the clerics of that belief system and special orders of laity only. The ordinary faithful would know only a few words, more or less for recognition.
In other words, it was supposed to be more like religious languages, but wasn't really well thought through. It disappeared in Second Edition and was not missed.
“Always” alignment does not actually mean always
Always: The creature is born with the indicated alignment. The creature may have a hereditary predisposition to the alignment or come from a plane that predetermines it. It is possible for individuals to change alignment, but such individuals are either unique or rare exceptions.
Note that creatures with acquired templates do not experience “birth,” so the first line does not apply. Becoming a vampire “always” changes one’s alignment, but in rare cases (perhaps as in the case of your NPC), that can be subverted.
And even in the cases of Evil vampires, they can be reformed. There’s even an explicit spell for doing that (santify the wicked from Book of Exalted Deeds), though I strongly encourage you to completely ignore it as it’s very poorly designed (like most of that book), and has some extremely unfortunate implications (if you ignore the fact that the books says it’s good, and read it, it sounds like a pretty awful, evil thing to do to a person).
Thus, yes, you can have a non-Evil vampire. Redeeming Evil creatures is not just a Good act, it is the quintessential Good act.
That said, no character is ever required to always act for the maximum Good; it is not an Evil act to choose to not perform a possible Good action.
That said, assault and murder are pretty much definitively Evil...
Evil Alignment is consistently not an acceptable reason to attack someone
Attacking someone without specific cause is assault, which is Evil and in most jurisdictions illegal. Continuing that assault until the target dies is murder, which is definitely Evil and illegal most everywhere.
A paladin who attacks someone purely on the basis of pinging for detect evil should, under the rules, fall on the spot, for willingly commiting an Evil act.1
This is described in multiple rulebooks. It’s one of the few things about alignment that actually is somewhat consistent.
Alignment is not a detailed or consistent system
Alignment is described in different ways in different books, and the definitions are vague, ambiguous, and conflicting. The system is a historical artifact of D&D’s roots: it is designed for a simplistic, hack-and-slash dungeon crawl, where the players are Good because they are the players, the goblins, orcs, and vampires are Evil because they’re the enemies, and no one ever thinks too hard about that. Unfortunately, D&D has evolved but alignment hasn’t evolved with it; though people play far more serious and varied games than a straight dungeon crawl, alignment is still the same nine boxes. Don’t expect much from it; I actually strongly encourage you to ignore it. Outside of those simple dungeon crawls, it causes more headaches and arguments than it will ever be worth.
1 I cannot more strongly recommend against the actual falling rules, however. Instead of stripping the paladin of class features (boring, interrupts the story, punishes the player), I strongly recommend switching the character to the appropriate alternate alignment variant paladin, so he keeps his powers they just become “dark” (or chaotic if that’s the way he falls).
Best Answer
I'm working on the assumption that D&D alignment is an objective mechanic: in a world where alignments can grant magical power and create planes of existence, and a spell can tell the difference between a man who saves babies for Pelor and a man who eats babies for Pelor, alignment must be objective and intent counts for very little.
This is a social issue, not a mechanical one.
Mandating changes to a player's character is a Big Deal and can destroy the trust in a group if handled poorly. If he thinks his actions don't merit punishment, he will go on the defensive and there will be Bad Feelings in the group regardless of the mechanical outcome. Before you lay down a ruling like this that will so seriously impact his character, understanding must be reached. To this end:
First decide if it's worth it.
I've had at least one chaotic monk who I just let alone because of the group's social dynamics: the player was younger by several years at an age when that was significant; his actions were rarely negative for the party; and he actually made the group laugh.
Alignment, especially as a class requirement, isn't a balance issue. Although alignment is almost impossible to excise from the system, exactly which alignment a character has is largely irrelevant to mechanical balance. So if everyone's safe and happy, maybe just let it drop because the problem is entirely cerebral and not actually impacting the game as it's played. Assuming that's not the case...
Work with him to create a common baseline.
Many alignment debates spring from both parties feeling the definitions are obvious when in fact everyone has a different idea of what the alignments mean and look like.
Before you bring in the alignment hammer, sit down with him outside the regular session. A lawful character is probably acting in accordance with a code of some sort, so ask him to help you understand his actions by writing down his code. Come prepared to study the D&D alignment concepts together (not to lecture him on them). Work with him to make the code fit the D&D definition of lawful while still being as close as possible to his vision of the character.
This gives you both a clear idea of what is and is not lawful for that character; now your discussions can have a reference point you both agree on. You might even find that he has some vision or insight you didn't understand before.
Make it a story.
Now that you have common ground outside the game, give his PC a chance to make the change organically from within: whether he adjusts his behavior to match his code, or changes his alignment, if you make it a cool story instead of a decree from on high there'll be more buy-in from the player.
You get the idea: help him do something cool whatever the mechanical result is.
You're not the boss
Again, this is a social issue. The Game Master is rarely the leader of the social group and he's certainly not the High Judge of Fun. Remember this whatever you do, and remember that everybody needs to be safe and happy first. Only then can we worry about following the rules.