It is actually very difficult to realise that the person you know well is a narcissist because the person with NPD is still the same person, except that they have an underlying pathology. The causes of NPD are not really well understood, faulty learning, devaluation and abuse early in life are certainly contributory factors. Sadly, it is very true that all you can do to save your own sanity is to leave the narcissist for good and never turn back. I want to give you an account of somebody I knew in the 1990s who went from being normal to a very unpleasant narcissist and somebody whom I haven't seen since late 1997. Sadly there is no hope that this person will ever change because their narcissism has even changed the way way in which they earn a living. You might have guessed that they have a book out, are running a cult, like to mentor people, charge money for their services and claim an impressive resume of top jobs and professional qualifications as psychotherapist and counsellor. It is not necessary to be very good at say writing such a book about how you can escape the rat-race by becoming self-employed, because there is no shortage of people who want to be told how they can do this. The irony is that such a book was written by an ordinary corporate employee who made the break by selling employment advice. It's not all that impressive a step.
Please see http://andandand.tripod.com/narcissist.htm
This page is on very old freespace, there might be a pop-up or tow but it is the nature of freespace and totally harmless to your computer.
I hope that it gives you some insights into this disorder and how to deal with it in other people.