How should this circuit be properly grounded?
I will do my best here.
I take it the reason you are asking about using NM wire is to save money? 
Purchasing NM is much cheaper. You can still run NM inside the conduct if there is 
room left. So if your conduit is  3/4 inch. you maybe able to pull 14/2 wire through with Lube.

Your subpanel would need a separate ground bus since the conduct is considered the (Ground)
By installing a Ground bus and using the NM 14/2 or 12/2 you must connect the Neutral and Ground separate as for the panel is not bonded. I believe the term is floating ground and neutral. Your Subpanel is connected to your Building since it is not Bonded. The question i have is why is your panel has only 1 bus bar? There should be 2 one for the Neutral and the other for the Ground. Your subpanel should have 1 Aluminum service line that contains 2 hots leads and 1 neutral and 1 ground. The other question i have is the service line coming from the Main Panel inside metal conduct as well? 
The gang boxes are grounded by the Conduct, but I would recommend you put a Pig Tail in the box.