Is the NVelocity project dead? Are there alternatives?

The Castle Project forked the project and have been maintaining it, and most recently released version 1.1.1 on 10 December 2010. More details can be found at the Castle Projects NVelocity site. They have also made a number of improvements to it, details of which can be found on their NVelocity improvements page. The project looks like it is now dead and in MonoRail 3, it has been replaced by Castle Blade which is based off Razor.

If you are looking for an alternative, then I would suggest the Razor view engine from ASP.Net MVC3 or the Spark View Engine.

The open source project RazorEngine allows you to use the the Razor View engine outside of ASP.Net MVC or Web Pages so you can use it to generate templated emails.

I don't see a reason not to use NVelocity (the Castle project fork). It's stable and your specific needs (email templates) are probably not as complex as the ones from other projects which use NVelocity, so you shouldn't expect any problems.

You could use brail or nhaml standalone to generate html emails.

The core of nhaml (not sure about brail??) has no references to MVC or ASP.

I have used nhaml to generate XPS documents for printing and reporting from a win forms app.

If it has to be text perhaps http://www.stringtemplate.org/

And here is a similar question How to use Brail as a stand-alone general purpose templating engine (like NVelocity)?