These are such good questions and you are not alone in this struggle. I've been dealing with the exact same thing. I think both schools of thought are correct, but you may be wanting to cling to crumbs of hope that the second approach would seem to offer (it actually doesn't) I found a great resource that is helping me sort through these questions- a lot of it is geared toward romantic relationships with emotionally unavailable people which includes NPDs but the struggles it talks about are the same as with family members and friends. It's a blog called Baggage Reclaimed. Here is the list of posts. I hope you find something that helps.
List of Posts