Whenever I use Edward's magic spells on the ghost, it gives the ghost health back?? Even though the strategy guide says that the ghosts are weak to earth and dark spells.

oops - sounds like it's the wrong way around. Earth and Dark spells will heal them, and they're weak to light spells.

I'll take a look at the others.

Ah.

So what's the best way to kill 2 ghouls and a ghost with Edward, Stella, and Te'ijal?

Use light spells,also I found the ice spells Edward has works well.

When Edward uses the ice spell on the ghouls, they regain health. Stella's blessing doesn't do anything to the ghouls.

Yes, Edward has two ice spells. One affects one monster (Icicle) and one affects the whole party (Ice Storm). Use the one that affects just one monster to get rid of the ghost. Then have Te'ijal and Stella take on the ghouls. Melee attacks work well.

Each attack only does 1 damage...

Try Edward's 'earth' spells - if there are still ghosts, just use Blast, but if there are no ghosts and multiple ghouls, use Quake.

Otherwise (or if you didn't get the earth spells), you might need to dodge them to make your way to Underfall, then get some Toxic Sludge. I'm not sure how well that works against these guys.

I think different weapons were more effective. If the ones currently equipped do not work go back one and it may have more damage.