What the hell is wrong with Pendragon?
I like Lord of the Rings and all thing Tolkien. However until The One Ring/Adventures of Middle Earth, I never "got it" in a way that allowed me to run a tabletop roleplaying campaign.
Why?
Because when read the stories, you are up there taking in the grand sweep of it all by the time you reach the end. With the tabletop roleplaying, you are down there at eye level living out the life of a character (players) or the NPCs (the referee).
And with out a hook it hard to translate between the the two.
What clicked about Middle Earth after reading the adventure/setting supplement for TOR/AiME the critical element is as follows.
Evil is not just philosophy or a choice, but a palpable force that TOR calls the Shadow. As a concept it is related to Call of Cthulu insanity mechanism. Except instead of "things man is not meant to know" it is that certain actions like violence of any kind, opens one's spirit to Arda's corruption by Morgoth. Represented in the Third Age by Shadow controlled by Sauron.
From this you can follow why
Good people are asshole and distrustful of those outside of their immediate community.
Why people need to spend long periods of time living life between adventures. And why adventures are so taxing on the mind and spirit in Middle Earth.
So with that insight I was able to understand the motivations and attitude of the NPCs and thus roleplay them in a way consistent with Tolkien's novels. Thus come up with situation that reflected Tolkien's stories but not run the players through a thinly veiled railroaded pastiche of one of the novels.
Now for PendragonI am also a fan of the Arthurian myths and the Pendragon RPG. Although it my friend who the master of refereeing Arthurian campaigns so I am more of a player.
But I had to say what would be the key insight to how to roleplay a character in Arthur's time the word would be Passion. Great Loves, and Hates, Great Desires, Great Sorrows, and so on. On the surface it seems little different than other types of medieval roleplaying like in Harn or Chivalry & Sorcery. However in the world of King Arthur all the thing one does in Harn or C&S is done passionately all the time.
Take for example my Scourge of the Demon Wolf adventure. A isolate village sick of being terrorized by a wolf pack, refuses to bring in the harvest. The Baron, pissed sends the PCs to deal with the situation one way or another.
In the adventure, I play everything straight forward. Yeah villager are pissed but understandably so. All the other character in the adventure motivations are presented pretty much as you would expect if you actually there.
Now if I ran this as part of a King Arthur campaign, I would ratchet up the emotions up by an order of magnitude. Every character would be more passionate about what motivates them.
Then into that I would throw the PCs to sort through the mess. Given how Pendragon works, if they manage to match their own passion with those of the NPCs, in the roleplaying sense not mechanical, then like they will be able to resolve what going on.
Wrapping it up.It sounds like you know the elements of the Arthurian mythos pretty well. So start by crafting some situations that would work in any vaguely medieval setting. Make sure some of the specifics reflect that it in Arthur's world and not say Middle Earth, or Lankhmar. Then rachets up the NPCs passion about their beliefs and motivation several notches. Throw your buddy into the middle of all that and see what shakes out.
Finally remember that in tabletop roleplaying all the histories, and other details don't matter unless it is relevant to how a character or creature behaves thus how it is roleplay. Figuring that out is the key to translating any literary setting into tabletop RPG campaign.