Diablo – Does a weapon with a percent of its damage returned as life proc from spells or melee hits only

Skills that state "% weapon damage" will deal the elemental damage from a weapon. Skills that state "% weapon damage as (element)" will not. So the weapon's fire damage would come through with Spectral Blade, but not with Magic Missile or Ray of Frost.

If the skill deals fire damage, either "naturally" or from a weapon effect, it should activate Conflagration.

Some sources here, here, here.

The Wizard will default to using their weapon if you are out of arcane power and attempt to use a left- or right-click bound skill that requires arcane power (i.e. not a Signature Spell). If you have a melee weapon equipped, your wizard will then run towards them to attack. If you have a wand, your wizard will shoot at the enemy.

Q1) This sounds like a bug, unless you have a spell bound to your left click that requires arcane power. I haven't seen this behaviour.

Q2) There is no way to change the "out of arcane power" behaviour of using your equipped weapon. You can hold down the Shift key to avoid running into melee an enemy if you are wielding a melee weapon but that only mitigates the behaviour, it does not change it.

Q3) You can bind the default attack to a left or right mouse button by removing that button's binding to any other skill (How do I set a mouse button to a regular attack?).