Random, IMHO. On my walkthrough I found it on the small dwarven island (Tekron, maybe? Has been a while...) in the temple, after defeating the ghost hero there.

It's random, sometimes it just doesn't spawn, it appends to me in my Mage Impossible game.

In my game there are like 7 Turn back scrolls. It's just luck (like the units and items you get and where)

I agree. I've been kicking around the idea of modifying the medals.txt file. Any medal that gives a bonus for spells cast in the first 10 rounds would only give a bonus for spells cast in the first 5 rounds, but the number of castings needed would be half. It should take roughly the same number of battles to get each level of medal, but each battle won't need to last 10 rounds to get the full benefit.

Random; in my current mage impossible game it pop'ed in a dragon spawned treasure chest at 'round level 10. Learned a new nifty thing after I completed the quest using the time back scroll (though I didn't have to actually complete the scroll portion of the quest to learn the new nifty thing)..