Q: In what quest do you cast this spell and what exactly does it prevent?

A: some enemies, such as wraiths, shadows or umbral worgs have a special attack that does two things: 1) It drains life energy in the form of stat loss, for example CON loss from a wraith attack or STR loss from a shadow attack. 2) Additionally this attack applies a kind of debuff to that player which lasts a certain tim (30 secs?). If a player dies while under the effect of said debuff, he will spawn another enemy of the kind that hit him with the debuff. The spell spawn screen prevents both of these effects as it renders the player immune to these special attacks, effectively warding players from stat loss at low levels and preventing spawns in the event of death.

The ward against CON and STR draining attacks has been confirmed through testing, it has not been tested yet whether this spell also prevents level drain attacks from spectres, nor am I sure whether this is the same attack that applies the "spawn upon death" effect to players.