Since the Dawngard, while having 100% spell absorption I witnessed some spells passing through. I don't know if my character is glitched or if absorption was (is) capped like everything else, but I would be grateful if someone could do this simple test and post the result here in order to have a definitive answer.

Go to Kilkreath ruins and stand for a while (2-3 minutes) in front of a beam of light used for the puzzle (which does continuously some minor spell damage). If absorption isn't capped and you have 100% absorption then everything will be absorbed. Since you can have very long streaks when the spells are absorbed, please don't post results from other tests since they can be misleading.

PS. Coincidence or not, I was "hit" 16 times over 100 seconds. If the beam does damage every second this would be equivalent to 84% absorption rate...

Maybe you need to put it on more than one item?