Being an internal candidate for a job has its pros and cons. For the 3 jobs that I've had over the course of my career I've been an internal candidate 4 times. Sometimes, I've successfully obtained the position or promotion and other times not. Thus, my personal experience has led me to a few do's and don'ts about being an internal candidate.
Do
Prepare
Just because you know a lot about the position because you're in the office (sometimes doing the job already) doesn't meant that you shouldn't still prepare for the interview. Research the job itself find out the type of employee the people you're interviewing with want to hire. What you think you know about the job may not be the direction that the organization wants to continue to go, so think about what you can bring that you haven't already shown your employer. Always try and have a bag of tricks! (Nothing up my sleeve... then cue the rabbit).
Ask thoughtful questions
Ask questions that you want to know the answer to. Ask about the future of the organization and how they see this position contributing to the organization's mission. It might be good to ask about the financial aspect of the job, or a process that your employer might want to improve. There is always something you don't know, so this is the perfect time to ask.
Pull from Both Current and Previous Experience
It's easy to talk about everything you've done with your current job, but don't be afraid to pull from previous jobs to talk about relevant experience if you have it. I've sometimes gone back to my first job nearly 10 years ago to reference a difficult situation I encountered and how I worked to solve it because it was the best example to the question asked.
Dress the part
Although you may know the office culture well, and part of that may be that you get to wear jeans on Friday, that doesn't mean that you should up to an interview reflecting the office culture. I've always found that wearing a suit is the best course of action, regardless of what the office culture reflects. After all, if you were an outside candidate you would dress professionally too.
Don't
Act like the job is yours to lose
You should definitely exude confidence, but be careful about being overconfident. Channel the idea that this job is yours to obtain (just like everyone else in the process). Even if you've been led to believe that it is a foregone conclusion, don't assume. There is always a chance that someone has more relevant experience than you.
Try to find out about the other candidates
I've always been curious about who else my employer was interviewing for the position, so I could see where I stacked up. Curiosity is natural, but resist the urge to inquire about the other candidates. Keeping the integrity of the process is important. After all, you don't want to be in the interview trying to outdo the other candidates. Focusing on yourself and what you bring to the organization is most important.
Believe you have nothing left to say
Don't take it for granted that your employer knows everything about you. Regardless of how long you've been in the position and how well you think your employer may know you and your work it's always a good reminder to talk about what you bring to the table. At the same time, ask them something that you may not know about the organization and its goals. There's always so much to learn in an interview.
Be too familiar
Odds are you probably know some of your co-workers or your boss closely. Now, I'm not saying don't use the rapport you have to facilitate good conversation. However, reminding them of that when you both stayed up way too late the night before your big event and got the giggles at 1 a.m. probably isn't the best story to tell.
Conclusion
At the end of the day, it's important to know the job, your strengths and weaknesses, and to ask thoughtful questions. You won't be able to know what the other candidate's experiences are, but if you bring your best, hopefully, your qualifications and previous experience will be exactly what your employer is looking for.