I got up to this spirit and aparently the dwarf has poisoned its tree or some such... am i supposed to somehow "cure" the spirit- i have the "spirit poison antidote" but it seems when i go to "use" it all that happens is i drink it!?

The only outcome after trying to place the antidote onto the alter, giving it or using it on the spirit, seems to be to just KILL the darned thing. Is that it? IS there a way to save it

Yes.

It confused me at first too. First, make sure you actually have the antidote and not the poison (I had both for some reason). Then, face the Spirit-of-the-Wood-that-resembles-a-deer-in-headlights in combat until it surrenders. Then, talk to it. Eventually, it will lead you to an option to give it to antidote in the dialogue. Forest saved. The pixies do a victory dance in your honor.

a victory dance? lol; I musta missed that..,

ok i did it!
What confused me was that he ended the dialog (after the "near dead" stage), i guess giving you the option of looting around the alter before completing this- then i restarted a dialog where he ends in teleporting you to NW again.

INTERESTING- if you use "heal"- a normal heal spell.. on UNDEAD it harms them! i tried HEALING the spirit and it killed it! (when he was near dead- after he had surrendered. I used negative energy ray on it at one point, during the combat, which HEALED it! it is exactly like an undead- i tried turning it, but that did absolutely nothing. It was said in the plot that the spirit was halfway between the dead and the living realms, so i guess it all makes sense. When i tried healing the spirit during combat, it said that he "resisted" the spell!