would like to run a game that is a mix of several Pallidum settings. It is a Nightbane game, however instead of being set in modern times it would instead be set in a dystopian future. The setting would start in a small section of a Mega-City, perhaps an older arcology, in what was formerly Germany. Basically the movie Dredd with Rifts Triax, and the supernatural operating in an ocean of humanity.

Ideally the game would be a player driven, almost west marches, and type of game. I am happy to construct much of the setting, and immediate game, however would like the players to come up with some of the major plot arcs. Also I’d like for the players to contribute to the world setting if they like. Other than asking for some of this input in the RTJ, I’m not sure how to have a good way to generate new ideas for this.

While I’d like to use the Savage Worlds system, I don’t have a lot of experience with it. My main concerns being that I am not very familiar with some of the magic system rules being needed to be used for the wide variety of characters in palladium. Also the game would require conversions of a large amount of palladium material and it is easier to pull what is going on from memory rather than try and convert every random thing.

Savage Worlds makes conversation much simpler than you might expect, particularly with magic.  The Rifts SW system can do all of the things you describe on its own, or you can open up the game to other Savage Worlds books and just build whatever you need.

The important part with this kind of conversion is to always remember you want to keep the concept from the source material, but use the system mechanics from the system with as little custom work as possible.

I would second that using Rifts Savage Worlds is a good jumping off point.  Between that and the various genre Companion books you should have all the building blocks to make things work.

I would highly recommend looking at the Super Powers Companion as a way for you and players to craft the actual Nightbane.  There's a lot of options in the "custom races" table of the SW Rifts player's guide, but I think the array of powers in the super powers companion will allow for a lot more potential mechanical emulation of just how bizarre some of the Nightbane can be.  Then you just skin it in a description of whatever twisted nightmare the Nightbane physically looks like.