I know this is an old thread but I just got this in the post and quite enjoying it although it has moment where it's quite frustrating. I also encountered that memory 128 bug so I've had to copy a save file into the base ram unit.
From what I can gather Rhun gets spells from either finding them by searching items, treasure chests or beating bosses to beating bosses in a certain way and from scrolls he finds and even from buying from shops and sellers. These scrolls seem to be random in obtaining spells. Some drain all your mana away while others will refill it or give you a complete new spell to even giving you nothing!
Melvy can obtain spells from talking to spirits or fairies if you see them floating around then switch to her. also she just like Rhun can obtain spells from boss fights, searching places and treasure chests etc.
If you find that one of the 2nd characters acting stupid and you want to move along press bother button I & II and that forces them to follow you.
Third, the magic... okay, so you have various spells. Your two characters each can cast a different selection of magic, and you'll get more during the game. Simple enough. But sometimes I can't use some spells, and I don't know why! Is there some magic meter I can't see (or recognize) which determines when I can use spells? Because like, why could I use the fire shield for some time but not the magic-ball shot? I don't get it at all. If there's some kind of meter, it should actually make it clear where it is. I think some kinds of item fixed this, but I'm not sure why. I imagine the language barrier is the biggest problem here, but it is unclear, there's nothing I could see that clearly states why the magic wasn't working...
There a mana bar in the form of a blue orb under each characters name. As you use more magic attacks the blue mana depletes and turns red which I assume is when your mana is depleted. Thankfully if you can stand still both your HP bar and Mana fills back up.
Rhun's shield spells will not work with certain spells so you may have to play around and see which ones work together.
It also looks like Melvy's base element is water but you can change this so she can use other spells. I not sure when or how you get this spell but there is one that looks like a colored bangle which you have to equip and while pressing down the attack button will charge up a rotating element icon above melvy's head. Here you have to try and time the right element that corresponds with the magic attack. So if you want to use fire magic on Melvy then you need to make sure she is imbued with the element of fire. You will probably have to do this every time the game loads into a new area.