According to Maddening Song, it causes the affected characters to attack the nearest target regardless of alignment. However, the spell has a major flaw, as I found tonight. I maddened two enemies nearly standing on each other, surrounded by 3 of my allies. I was at near max range. One of the maddened enemies then ignores all targets next to him and phoenix dives to me. Feels like such a waste of a source point, and makes the ability nearly useless.