Having just read the book myself, I find they used elements of the original book well enough, removing things they obviously couldn't do because of budget limitations, and obviously had to cut short the story to keep the movie a non-tedious length.
They did use the element of Bastian losing his memories of his previous life in the last half of the bood in The Neverending Story 2, but they really bastardized that into something completely unlike the original story.
The book itself is a nice enough story, and I certainly like what it truly stood for: Bastian reconnecting with his father after the loss of his mother. However, when it comes to the plot and characterization driving the story, it's not that great a read, and gets quiet tedious in places. Whilst I realize a lot of what happens in Fantastica is allegorical, I find, as an adult, that it's too simplistic. But that's probably the problem: I'm reading it from the perspective of an adult, instead of enjoying from the perspective of a child.
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