Since everyone recommended I put my stats into Wisdom, Charisma, and Intelligence I figured I may as well be a mage. I finished Old Mabbeths quest and talked to Dak'kon but I don't really understand how to cast spells or how magic works really. Nameless One keeps telling me that it's in my spell book but I don't see a spell book in my inventory nor do I see any spells when I right click. Any help would be appreciated.

Your spell book is not in your inventory, it's a part of the game GUI. You will find it in the oval at the bottom right, between map and rest. PST uses AD&D rules, so you must rest after you have chosen which spells to 'remember', before they will become available for use.

First you need to memorize the spells you want to cast. In the lower right corner there is a button called Mage's spell book, open it. On the right side are the spells your character knows, on the left side are the ones he memorized. Memorize the ones you need, and rest. After resting you can cast each memorized spell (you have to memorize the same spell as many times as you want to cast it). To actually cast them you need to use the action menu: right click anywhere in the screen, and an oval-shaped menu appears. The explosion-like icon is the select spell, it opens the list of memorized spells at the bottom. Simply click the desired spell, and close the action menu. Your spell has been cast.

Blame the authors of AD&D edition 2 for this convoluted scheme :)

Assuming that the ui of PS:T is the same as BG in this regard, any clerics you obtain will choose their spells by a similar method, but in a separate menu (in BG, the button directly above the spellbook). The reason for this is that (in BG and IWD) it's possible to have a character with both types of spells, and the spellslots don't stack (you couldn't cast Magic Missile using the cleric spellslots, for instance).