As said before, if a student can receive 100% by quoting the textbook in an exam, then it must be a poorly designed exam. There are indeed many poorly designed exams around, if the instructors are lazy. However, it's simply unimaginable that students are not allowed to cite from the official textbook in answering questions without explicitly citing on each occurrence.

As to the Duke story the student was to be expelled by the professor for not properly cite the textbook, someone must be fooling around. I have friends went to Duke, and I have friends teaching at Duke. The 'professor' must not be at Duke. It definitely takes more to kick out a student on terms of plagiarism, and have much more involved.