So the ghost does not have a book in his hand or anywhere around his body. WTF do I do now.
I have no other save to fall back on.

Reloading does not work. Note from a friend brought me here and I'm stuck here.

You follow the ghost to the end of the cave, where he waits in a small cell like room sitting on a pile of rubble. The book should be sitting on the ground right beside him.

Once you get the book the ghost leads you out a door, that is sealed by magic when you pass it the first time. Epic fight, then there is a switch in the treasure room to get you back out of the place.

Sounds like you ran into a glitched quest though.

Thanks but "NO BOOK" is to be found. Its a glitch that needs a patch.

Could you have possibly kicked it when stepping into that small room with the ghost and sent it flying away?

Have you crouched down with your cursor to the floor making sure it didn't sink into the ground, but could possibly still be picked up?

More than likely the quest is glitched for you, but it's always good to make sure of the little things you may not realize you did.