Fantasy in use with old novel (8)
I believe the answer is:
'fantasy' is the definition.
'in use with old novel' is the wordplay.
'with' says to put letters next to each other.
'novel' indicates anagramming the letters (letters in a new or novel order).
'inuse' put after 'old' is 'oldinuse'.
'oldinuse' anagrammed gives 'DELUSION'.
(Other definitions for delusion that I've seen before include "Mistaken belief in the face of contradictory evidence" , "Misapprehension" , "Misconception - deception" , "Fallacy" , "False or mistaken belief" .)