Sorry, but after verification, the solution is not exactly as marked, please read this post for details:
http://www.gog.com/forum/magic_carpet_series/spell_vampires/post5

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Could someone explain exactly how spell vampires work. Up till level 26 any spell you find in a red jar gets carried over. From level 27 onwards is it:

A) Starting spells of every level are fixed. You always start with spells A, B and C, no matter what happened in previous levels and no matter whther you found them in previous levels or not.

OR

B) "Stolen" spells between worlds are fixed, but otherwise spells still carry over. i.e. if in level 30 you can find spells A, B and C, and before level 31 spell B gets stolen, then level 31 starts without spell B, and with spells A and C, but only if you found them in previous level.

Can anyone confirm?

Thanks.

You start with a fixed set of spells (including none at all) in each new world now. That was quite a surprise for me, after carefully collecting them in previous levels. (That's why I told you not to worry about missing a spell in the other thread ;-)
Spells will be lying around for you (and the other wizards) to grab and one of the best sources for spells will actually be your opponents from now on. Sending one of them to the ground gives you access to what he has collected so far. In the beginning phase of a level you've to balance the time spent on collecting, base building and dogfighting an opponent. Later on your opponents castles will also be a great source of mana. Send one down and demolish his base to free stored mana.

Thanks both. I've marked triock's as solution since he posted first, but thanks for the detailed answer DeMignon.

EDIT:

OK, I just used cheat codes to verify this (QUICK, Shift+C), and I'm afraid the answer is B, not A as marked.

Basically with spell vampires it works like this: Your starting spells are fixed, but you only get the starting spells if you've picked a jar with them in a previous level. So if the starting spells are A, B and C, but you've never found a jar with B before, then you will start with only A and C.

That said, you still shouldn't worry about finding all spells in the first levels or so. The way this works is that a level contains usually jars with several spells, but if you already found them on previous levels, they don't appear (but still count to your spell %, which is why you can get 50%, even without finding any spells).
What this means is that if you don't find a spell on a level, you can find it on a later level. Quite often, the jars with spells that you should have by now appear right next to your starting positioin, so you can't miss them. As DeMignon has written, you can also find them on wizards' corpses. So by the time you reach level higher levels, you should easily have all spells, after which the only restrictions become the spell vampires.

Question though, does anyone remember if the spell jars on wizards' corpses remain forever or do they disappear after a few seconds (which is what a game guide suggests)?

Like you wrote, especially on higher levels, you won't feel the difference, because by winning a level you collect all available spells from your enemies anyway, thus the next level is only determined by what's stolen. Difficult question, because when you see them, you don't wait for them to disappear ;-)
The AI comes and collects spells with a certain priority, so it might seem as they would "disappear", but aside from that I think they stay put. My last playthrough is over two years ago, so I'm not hundred percent sure, though.

I don't think they disappear, though like DeMignon, I always wanted whatever just dropped badly enough to grab it pronto, so maybe they are on a timer. I don't see any reason to add such a timer, though.

I HAVE seen several spell pots drop when I killed an enemy wizard, then rapidly disappear; I've always figured that is because the pots are spells I already have and the game is just checking for duplicates and removing them.

Refer to exhibit A. It covers all this.

Yes, that's why I thought it's timed, but I think you're right, it's just spells you already have.

By the way, I just had a wizard claim a corpse, and he did get the loose mana that belonged to its unfortunate owner (that would be me). Not sure if he was aiming for the corpse or some mana laying near it.

I've never seen a wizard target corpse with intent. I think, like buildings, they'll claim it if it happens to be in their line of fire, but wizards don't actively target them.

I've left multiple bodies on the ground while grinding down a castle before, and the enemies just left them.

New update: Jars dropped from corpses seem to be timed. The game guidebook seems to suggest that and I just experienced it. Killed a wizard who dropped a jar (definitely dropped one; it wasn't a case of them disappearing immediately since you already have them; this one stayed for some time). However after some time I got killed myself by bees before I could claim it. When I came back to the corpse, the jar wasn't there.

Not sure if it's me dying that caused it to disappear, but I think it's just a timer.

Did you pick up a spell elsewhere in the level (or perhaps from another enemy wizard corpse) in the meantime?

No.

I just have another update. On level Thammon, a wizard was killed (either by a rival wizard or a creature, I took no part in it, just saw the notification). I looked at the map and saw non-blinking red sqares close. Flew towards them, and sure enough that was the corpse with the jars. Just as I was approaching the jars disappeared, literally just a second before I picked them.

Also, Firebrands guide says that the jars dropped by wizards "only last a few seconds after the wizard's death". In my experience it's more than few seconds, but it looks like they are timed nonetheless.

Fair enough. Good to know, too; don't screw around if you see red jars next to a body.