That book was "required" for us, but absolutely not necessary. We just had our PE OSCE as M2s, and we had to memorize these cards the course department made for us on 5 systems. The class and OSCE were a waste of time really -- especially since the OSCE was right before our pharm and path finals.
The best Physical Diagnosis book out there is a very small book called "Degowin's Diagnostic Examination". This book is great for learning every examination procedure and history-taking point. It gives great differential diagnoses based on symptoms and emphasizes medical historical points as they relate to making a diagnosis. This book was invaluable for USMLE Steps 1, 2 and 3 and is definitely one of the books that you will keep into residency and beyond. This book is quite inexpensive too.
You sound like you might be a Wayne student. Bates is good, but most of the grade comes from asking everything in the history. And yes, you have to ask all 4 parts of the CAGE questionnaire, even if they're all no answers.