yeah, you need to check in the character menu (press C in inventory mode) and see how much damage Quen absorbs , this depends of your Sign Intensity and other buffs you manage to acquire . If the enemy does more damage than your shield, you will not be able to regenerate anything , it will break your active shield and inflict damage on you,, the same with the base Quen . This makes the choice of this skill questionable if not combined with some decent sign intensity , a greater blue mutagen and three active blue skills are a must if you want to use this , in my opinion . Also runes that increase Quen intensity by 10% are useful .
Regarding to the OP's problem with casting 2nd level Quen, i get that pretty often myself . it casts 1st level Quen without me releasing the key, it might be a bug .