Should a history book written as a narrative be disregarded as a source?
[T]he book is written in first person, in some narrative form, with dialogue added. I find it a little strange, because the text has complete conversations, that I think could not possibly be recorded in such detail.

The author may have recreated dialogue, rather than definitely sourced dialogue. Perhaps look for an author's note, disclaimer, or similar, to see whether techniques are disclosed.

Should a history book written as a narrative be disregarded as a source? Are these types of texts something I should skip over when writing a research paper?

Use sources you believe to be accurate. When there's doubt, sources needn't be abandoned, caution can be taken to absolve responsibility for prior errors, e.g., Author X provides the following account, &quot;...&quot;.