The correct code for 'annotate_menu()' looks like this:

function annotate_menu($may_cache) {
$items = array();
if ($may_cache) {
$items[] = array(
'path' => 'admin/settings/annotate',
'title' => t('Annotation settings'),
'description' => t('Change how annotations behave.'),
'callback' => 'drupal_get_form',
'callback arguments' => array('annotate_admin_settings'),
'access' => user_access('administer site configuration')
);
}
return $items;
}

However, the menu item it is supposed to create will not appear until the Annotate module is in a complete enough state for it to be safely enabled. So disable the module if you have enabled it and install the complete, corrected 'annotate.module' source code available from this site in place of the one copied from the book. Now enable the Annotate module and reload the page in your browser. The 'Annotation settings' menu item should appear.