I had just finished Nalia's quest and was seling off the stuff and after I quit the shop Edwin just enters dialogue mode and says he doesn't want to be part of my party anymore. Is there anyway of finding him or getting him back in the party? Any help would be appreciated since he was my best spellcaster, and he took some good items with himself also.

ummm.. nope.. unless you want to cheat ..

Did something bad happen? Reload.
Did somebody (Edwin) get pissed off because you made him do something he didn't want to? Try to remedy it.

"I warn you, I cannot abide this charity. It is not to my tastes at all."

do you get a reputation point for saving nalia ?

Edwin being evil might object to too high a reputation, although you would think it would have happened as soon as you finished clearing the keep

So he just runs off and can't be found anywhere afterwards?

yes, though (ToB spoiler)
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I believe once you start ToB you can get back even the runaway and the dead.

not the dead.... dunno bout the runaway

Sounds like your rep got too high. Only fix is to go to a save the is before he left and either fix your rep or loot him before he decides to leave.

Another possibility I guess would be to boot him from the party before your rep goes up, that way you should still have the option of re-recruiting him later.

If you want to hang on to Edwin for the balance of the game, you will have to watch your reputation. Keep in mind that if you demand to know what the rewards will be anytime someone offers you a quest, you will sometimes avoid getting a reputation point at the end (sometimes you even get a little extra gold out of it too).