So, could an author directly quote a passage from another book?
For instance, let's say a character said something like,
This is such a good book Fran, listen to this: "The man in black fled across the desert, and the gunslinger followed."
And you can use song lyrics as long as you give attribution?
Song lyrics are very, very tricky. Even a single line is a significant percentage of the total content of the song, so the rights holders generally argue that it is not covered under fair use. The people who hold the publishing rights to the lyrics (which may or may not be the people who wrote the song) can -- and do -- ask for fairly high fees to quote lyrics, fees that can be based on the number of copies of the work that will be sold. So, for a novel that has a million-copy first printing, it can add up fast.
Also, it is the responsibility of the author (not the publisher) to acquire and pay for these rights. King and his team had to do a lot of work and pay a significant amount of money for the rights to the lyrics quoted in
Christine, for example. Often people get around this by paraphrasing rather than quoting directly: "That Eagles song about the hotel," which is a legitimate and free thing to do rather than quoting "On a dark desert highway..."
As far as quoting a passage from another book...I think that would be risky, too. The novel is not a critical work (where fair use generally applies)...it's a commercial work. I would request permission from the author/copyright holder. Those credits that appear on the copyright page aren't just attributions -- they represent permission sought and given for someone else's words to appear in the book.
For works of non-fiction, I always get a signed letter from the author of anything I quote, no matter how insignificant. For
The Dark Tower Companion, where I included interviews with various people, I also obtained a letter allowing me to print the text of the interview in the book, even though the interview was conducted with the understanding that that was what was going to happen.