You are welcome to use the public Neverending Tale website with your students.
The public version of The Neverending Tale has enjoyed popularity from "kids and kids-at-heart" all over the world. We believe its popularity among students can be used to encourage independent learning of reading and writing, high academic achievement, desire for continued learning, and a sense of pride in a students' own work, in addition to technical mastery of word-processing.
Since 1999, we had hoped to extend the popularity and usefulness of The Neverending Tale into the classroom, as a tool for you and for other teachers.
However, we have not been successful at sustaining funding for development over this time; and the project has sort of stalled since then. The classroom version of The Neverending Tale will not likely proceed without committment from somebody to fund it.
All of our code that we've developed for the clasroom version is archived at http://www.sourceforge.net/projects/tales/ and if you know of a perl programmer (or project manager) who is interested in taking over the development, you are welcome to download what we have.