Seems to be an actual bug --

When I return the Dangling Participle to the Bookworm, everything works until it's the Diphthong's turn to speak. He just stands there looking foolish and doesn't make a sound, and the game refuses to progress. It just sits there loading forever. I've quit and saved and reloaded and I've even messed with sound and detail levels, all to no avail.

Simple solution is to just play the game through ScummVM. You also can play the enhanced Windows CD version with the improved portrait graphics through ScummVM

Actually it happened to me too, but upon reloading the game I have been able to get the book