The same with me. Obviously I must throw something to that switch. How do I use spells? I have a spellbook and a magic arrow spell, but "B" (or "S") key doesn't seem to have an effect. I understand some items can be used if I drop them to my body figure (especially food), but not spells.
EDIT: I found it. To cast a magic arrow I have to have a spellbook in my LEFT hand and then I can choose the spell (key "B" in "Modern" control).
I have completed the demo.