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From what I've noticed, the stealth skill doesn't increase by time spent around walking near others while hidden. It increases based upon the number of times you successfully enter hidden mode. I have not tested to see if it must be near an NPC or not, although I would not be surprised if it was not required to increase the skill. I simply stood a few yards behind a non patrolling NPC and repeatedly entered and exited being hidden. It was every 4th or 5th time successfully entering hidden mode that my stealth skill would increase. You can max the skill quite quickly with this method