As for setting up spells you should download and look at Neikuns Laguardian since it attacks with a custom waterbolt spell, that should show you how its done.
LocalFire, thanks. I've been taking a look at the laguardian. Fun stuff! Only one problem, I've noticed when a player tries to cast Water Bolt (not the laguardian mind you. He knows his spells) Grimrock returns an error.
"warning! unknown built-in spell: waterBolt"
Another forum post cites the same error but no one has cleared it up yet. Just wondering if you or others knew anything about fixing it. If I figure out the solution by trial and error, I'll post it here

Now I'm off to read the spell maker's manual in the EDITING SUPERTHREAD.
Edit: Found out from a post by Grimwold that the "defineObject" part of a spell should be in "object.lua" (which makes sense) not "spell.lua" as it was in the download of the Laguardian. But even after I moved it to the proper .lua, I get the same exact error about "waterBolt" being an unknown spell. There must be a line missing or typo somewhere that defines "waterBolt"?
(note: waterBolt is the onCast. Everything else is named "water_bolt", but I've seen similar things with the vanilla spells. I'll keep tinkering.)