Q. If a Wizard or his unit is engaged in close combat with enemy models
is the Wizard allowed to cast spells?
A. There is no general rule preventing a Wizard from casting spells while
he or his unit is in close combat, but specific spells may not be castable
in this situation. Spells specifically defined as "Magic Missiles",
for instance, cannot be cast while the Wizard or his unit is engaged in
close combat, and some other spells explicitly cover this situation in
their description. Further, a spell cannot be cast at a unit in close
combat unless its description explicitly allows it to do so and many spells
require line of sight. These factors, taken together, generally restrict
the available targets for the Wizard's spells.
Note however, that nowhere in the rules does it state that the act of being
engaged in close combat blocks line of sight.....only models and terrain
block line of sight. This means that in instances where a Wizard's line
of sight is not entirely blocked by other models, the Wizard may still be
able to draw line of sight to potential targets. This also means that
Wizards who are riding on Large Targets or whom are Large Targets by nature
may still be able to draw line of sight to potential targets, even if
their frontage is fully occupied by enemy models (who are not also Large
Targets).