In the Woodlands deck, there's a card which says that each character has to pass a life / fate / gold to a character to his right, and then an item / follower / spell.

Now say that the character to my right has 2 craft or is already maxed out with spells, can i still pass him a spell, which would probably make him discard to his spell limit, or is it just impossible to pass a spell in that situation?

I would assume you pass to your neighbor, and then he discards down to his limit immediately.

An argument exists for either case, but I believe since you aren't "gaining" a spell, you can still go through with the effect.

I am not the best in rules at times, but isn't there a rule if your inventory is full and you pick up an item, you can choose which item to drop?

If so, wouldn't the same rule apply here?

I may be wrong about the inventory thing.

I would think so...

related question though, if a character always has a spell, and passes a spell to the character to his right, does he right away draw a new spell, or does he have to wait for the passing cycle to end, to see that he doesn't get a spell back?

I agree with Artaterxes; this card doesn't say "gain" but "pass" instead, so a character can receive 1 Spell over his Spell limit in this case. Then the normal rules for discarding down to your maximum Spells will apply.

related question though, if a character always has a spell, and passes a spell to the character to his right, does he right away draw a new spell, or does he have to wait for the passing cycle to end, to see that he doesn't get a spell back?

Cards like the Wand or the Prophetess say that you immediately gain a Spell, so it happens as soon as you have no Spells. You don't have to wait for the Faerie Market to be fully resolved.