Here are (finally) the cheats For Magic Carpet 2:

Press I and then type WINDY followed by Enter.
You can now use these keys:

Alt-F1  Access all spells
Alt-F2  More mana
Alt-F3  Destroy all players
Alt-F4  Destroy all castles
Alt-F5  Destroy all balloons
Alt-F6  Heal
Alt-F7  Kill all creatures
Alt-F8  More Spell Experience Points
Alt-F9  Free Spell Usage ON/OFF
Alt-F10 Invincibility ON/OFF
Shift-D Complete current objective
Shift-C Complete level

(Quoted from a post by Theo Savidis)