the game has always ignored scroll when offering you new spells at level up [a long standing design issue] however not being able to cast the spell after picking it again at level up is a new one... its probable the level 3 slot is behind it and that would mean its not just chromatic orb but any spell repicked
edit confirmed ... taking orb at level when you already know it causes the bug
Okay, with a bit more testing and the helpful hints here (plus some luck with the saves I happened to have from my last playthrough), I can confirm that:
- If Gale learns Chromatic Orb from a scroll at level 1, does not prepare it, then picks it at level up to 2, he can then cast it, ie the bug does not occur.
- If Gale learns Chromatic Orb from a scroll at level 1, prepares it, then levels up to 2 and picks the spell again the bug occurs and he can no longer cast it.
- If Gale learns Chromatic Orb from a scroll at level 1, prepares it, then swaps the spell out of his prepared list again, levels up to 2 and picks the spell again the bug does NOT occur.
- If Gale learns Chromatic Orb from a scroll at level 1, prepares it, CASTS it, then swaps the spell out of his prepared list again, levels up to 2 and picks the spell again the bug occurs and he can no longer cast it.
- If Gale has already learned Chromatic Orb and picks it at level up to 3, then the bug occurs and he can no longer cast it, no matter what. But feasibly I had had it in his spellbook and cast it at some point between my level up to 2 and level up to 3 saves. I don't recall.
- I can't get the bug to occur with False Life, Protection from Evil and Good, or Burning Hands (the scrolls I happened to have found in my saves up to level 3).
Then I got bored of reloading, so that's it for now! At least it's confirmed that it's not just at later levels that the problem occurs, and it's not all spells that are affected.