Some sloppy code, which can no doubt be optimized by an order of magnitude or so: 
use strict;

my (@data, %words, $my, $mx, $x, $y);

for (<DATA>) {
    chomp; split //; s/ // for @_;
    push @data, [@_];
}

$my = $#data;
$mx = $#{$data[0]};

for $y (0..$my) {
    for $x (0..$mx) {
        if ($data[$y][$x]) {
            traverse('', 8, $x, $y, @data);
        }
    }
}

print scalar keys %words;

sub traverse {
    my ($w, $d, $x, $y) = @_[0..3];
    my @d = map {[@$_]} @_[4..$#_];
    $w .= $d[$y][$x];
    $words{$w} = () if !exists $words{$w};
    return if !--$d;
    $d[$y][$x] = '';
    if ($y > 0 && $x > 0 && $d[($y-1)][($x-1)]) { traverse($w, $d, ($x
+-1), ($y-1), @d); }
    if ($y < $my && $x > 0 && $d[($y+1)][($x-1)]) { traverse($w, $d, (
+$x-1), ($y+1), @d); }
    if ($y > 0 && $x < $mx && $d[($y-1)][($x+1)]) { traverse($w, $d, (
+$x+1), ($y-1), @d); }
    if ($y < $my && $x < $mx && $d[($y+1)][($x+1)]) { traverse($w, $d,
+ ($x+1), ($y+1), @d); }
}


__DATA__
A J S B K
 F O X G
B K T C L
 G P Y H
C L U D M
 H Q Z I
D M V E N
 I R A J
E N W F O

[download]
I get 36382 possibles at a max depth of 8 characters. Each of these would need to be matched against the dictionary list, which I don't happen to have handy at the moment.

In reply to Re: "Bookworm" solver project by TedPride
in thread "Bookworm" solver project by japhy

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