Crystallising spells is the way you enchant weapons - the process is:
1) Take the spell you wish to enchant, right click -> crystallise. You now have the spell crystal.
2) Find the spell crystal in your inventory and right click -> Enchant right hand. Now the weapon in your right hand will be enchanted with the spell. You can see a little crystal in the top left of the weapon icon with a number next to it (will be 0 atm) and if you look at the info of the weapon, the spell enchant will be shown at the bottom.
3) Once you have learnt "Make sap crystal" from the magic trainer, you can use it to make sap crystals. Once you have a sap crystal, find it in your inventory and right click -> recharge right hand. Once you have done this you will get a message about the sap charge in the weapon being changed.
4) To use the enchant, once the number next to the crystal on the icon is 1 or more, target the entity you want to cast on and use the "Use item enchantment" skill that you will have started with. If you've already removed it, you can find it in your action progression trees and drag it to the hands bar. Using this skill will cast the enchantment.
Notes:
Enchantments only cast when you use the skill.
Enchantments need sap charge to cast; the weapon's sap load determines how many shots you get on a "fully charged" weapon
As well as sap charge, they use up your sap/hp depending on which credits the spell has on it
Time credits
do not affect enchantments - all enchants are "instant cast" so put the biggest time credit you have on your enchants.
Range credits do affect enchants - up to you whether you want them or not, but since action penalty still applies, think carefully about whether you're enchanting an amp (and so will be in light armour so no action penalty) or a melee weapon and will be in heavy armour (so a big action penalty)
Enchants cannot be removed, but as you've already found, you can "overwrite" them
As for the weapon doing less damage, the enchant should not affect that at all - there's a few reasons why your damage will have gone down; mostly to do with the levels of you, your weap, the stanzas you're using, and the stuff you're killing. If you've "outgrown" your weapon you'll start doing less damage.