The spell was never intended to work.  When the quest was first introduced, this was actually pointed out in the quest itself, and the wizard gave you the cloak as way of apologizing for the bad spell.  However, the way the quest works now, there's nothing really telling you that the spell you get is meant to not work.

I think it might be better served as a scroll to be used in battle. That way it doesn't use up the spells on the book and is gone the moment you use it, as a one shot deal.

Since players are beginning to discover its effects, I think that the spell should change to do other random things as well. If you have the scroll in your inventory when you come back, then it should result in the cloak of stars not being given to you. The guilt of a poorly made spell is no longer there and this would force players to think... Although, if there are changes to this quest, I suggest that it be kept secret

Yeah, if only the ability bar was customizable or saved most frequently used skills. I am sick and tired of all the clutter on it in general besides having useless skills that do nothing adding to it lol

This.  Very Much.

My apologies, then.  You can customize the contents of the action bar to some extent.  If you select the spells button (at the bottom of the action bar), for example, it will show you a list of spells available to the character.  There's an icon to the right of each spell.  If you click on the icon for a spell that is not on your action bar you can then click on any icon in the action bar and that spell will then be available in that slot.  Works the same for skills and items.

My complaint is not that the spell doesn't work, if that was really the intent of the quest.  It's that the useless spell sticks around afterwards. It really should be a one time scroll like parrotmath suggested.