It depends if you want to be polite or not. There's no single word that comes to mind but informally I would refer to someone like this as being "full of shit". Formally I would call this person a "pathological liar" or a "compulsive liar". If they believe their own lies you would call them "deluded"

Common words/slang for people who talk too much: Chatterbox, yappy (v.), blabbermouth, busybody Common words/slang for liars: Liar, phony, story-teller, charlatan Common words/slang for braggarts: Braggart, narcissistic (v.), boastful (v.), egomaniac

A person who tells tall tales is a "fabulist." Some one who lies a lot is a "prevaricator" (which is just a polite word for "liar")

Hello! You could also say that a person that talks too much has "verbal diarrhea". And if you want to say that someone is a liar then a gentle way to say it would be "dishonest" which is the opposite of "honest". I hope that helps!

You could also use "fantasist" - check out the examples in dictionary.cambridge.org - this seems to fit with your description...