I have seem to have run into a bug involving the "purifying the focal points" quest at winterhold. Around this time, some bug causes magicka regeneration to be near instantaneous, making it seem like you have infinite magicka. The magicka bar never shows up, since it is in a constantly filled state. There seems to be a workaround if you use the console and use "player.ShowRaceMenu", however obviously xbox users don't have access to the console. I have seen a few other people run into it, and they also say it started happening at winterhold.

Just some references:
http://www.gamesas.com/index.php?/topic/1259687-unlimited-magic/
http://answers.yahoo.com/question/index?qid=20111111054955AAlwpmX
https://www.youtube.com/watch?v=VvJT8MaY_R0

i really hope they fix this, it's fun but ruins the game a bit

I had the same problem and I just solved it by accident a couple hours ago. What worked for me was going to markarth on the first major quest for the dark brotherhood. I went into the shop and spoke to the girl. After I talked to her i went and talked to the old lady behind the counter, I was getting frustrated by the glitch so i decided to kill her with my magic. Right after she died a guard came in and told me of the bounty on my head. I refused to go to jail, when i started fighting the guard i immediately noticed that my magic gauge was now depleting. After the guard killed me and i reloaded my last save the glitch was still fixed.

so my advice:
-go to markarth
-enter apothicary (sorry cant remember the name, i know it is on the far left when you enter the city)
-kill old woman
-refuse to go to jail
-die and reload game

This is what worked for me, sorry if it doesn't work for you.

I found out what exactly is causing this, a fortify magicka 100 points effect, which is supposed to last for two hours, the time limit seems to be stuck however. I did travel to markarth, and when I got there I noticed the time limit was no longer stuck and was decreasing, I waited for two hours and the effect was gone. I didn't need to do anything else besides just visiting.

I'm not sure if visiting markarth actually does anything, but the effect is gone for myself now. Anyone else effected by this, try going to Markarth and walk inside a few buildings.

I had this happen also. It seemed to go away after I fast traveled.