If you want to play with the AI turned on, you should choose an appropriate AI script -- the 'Default' is useless, especially in melee. Go to each member's stat page and select 'Customize'. Click on 'Script' and choose an appropriate one. If you are unsure which script fits which character properly, experiment. You can also download the superior eSeries
scripts and choose one of those instead.
Be aware that using scripts on your spellcasters can be detrimental to what you might want -- spells being used at inappropriate times and places.