Didn't Peter go to school with MJ and Ned? (spoilers)

So now they've completely forgotten him? Does that mean everyone he's ever associated with has now forgotten he ever existed? Including his school, employers, neighbors, extended family, everyone?

Also when Happy asked Peter at the end how he knew May, he says he knew her through spiderman and Happy seems content with that.

I assume (I can't remember exactly) that Happy met May through his association with spiderman and he would have known the kid who was spiderman and what he looked like.

So does he just have a blank spot in his memory when it comes to what that kid looked like? Does he just give up and never try to track down that person again even though he had an important relationship with him?

I admit I haven't followed this Spiderman very closely so forgive me if I've missed something.

I thought the spell was supposed to be that everyone forgot any revelation that Peter was spiderman, not to erase him from existence.