20 lines (17 with data), 676 Bytes

{% if messages[0]['role'] == 'system' %}
    {% set system_message = messages[0]['content'] %}
    {% set messages = messages[1:] %}
{% else %}
    {% set system_message = '' %}
{% endif %}

{{ system_message | trim }}
{% for message in messages %}
    {% if (message['role'] == 'user') != (loop.index0 % 2 == 0) %}
        {{ raise_exception('Conversation roles must alternate user/assistant/user/assistant/...') }}
    {% endif %}

    {% set content = message['content'].replace('\r\n', '\n').replace('\n\n', '\n') %}
    {{ '\n\n' + message['role'] | capitalize + ': ' + content | trim }}
{% endfor %}

{% if add_generation_prompt %}
    {{ '\n\nAssistant:' }}
{% endif %}