[Balanor]

So when I was deleveled this I accumulated 85k in xp. Is this just for forging or if one fugues either while the cap is on or after, will the xp be taken from the bank?
( I do not plan to make dying a habit if I can)

Yes, the banked XP for previously high-level PC will be used for the Fugue, the enchantment forges, for creating wands, potions, scrolls, and in any other case where XP might be taken.

When releveling begins I gather that xp will not be banked and what you earn through the various methods goes to the leveling process. If you manage to get to level 20, will any xp you gain after the level go into the bank or it will just be gone with the wind.

It is not possible to accumulate more XP than the level cap.