RESTAURANT REVIEW THE PALACE CAFE : Puck Stopped Here : The famed Spago chef and his wife have dined at the State Street hot spot, known for its spices, jazz and noise level.

Acouple of years ago, I encountered Barbara Lazaroff in the lobby of Santa Barbara’s Four Seasons Biltmore Hotel. Lazaroff, besides being one of the West Coast’s leading restaurant designers, happens to be the spouse of Wolfgang Puck. Puck, himself a preeminent American chef, was in town to confer with several prominent culinary colleagues.

Just where, I asked Barbara, was the group planning to have dinner? I secretly hoped that she’d ask me for a recommendation. No such luck. They were off that evening, she said, to the Palace Cafe.

Since its opening just off State Street some half a dozen years ago, Steven Sponder’s restaurant has, indeed, been a hot spot--for its noise level, which is high; for the jazz on its audio system, and for its spices.

Sponder serves Cajun-Creole-Caribbean haute cuisine. He’s taken the three basics--onions, celery and bell peppers, and made fascinating creations. Not all of the restaurant’s dishes make it, but when they do, you know that Wolfgang and Barbara had the right idea.

The best dish I’ve had there is the crawfish etoufee (market price). The crawfish tails are done in the classic Southern manner, smothered with onions and bell peppers, drenched in a shrimp stock with its own roux and accompanying spices, then doused with green onions and served with rice. Nothing’s overcooked and the flavors simply adhere to your palate.

It is a simpler dish, but it would be difficult to fault the blackened filet mignon ($17.75). A beautiful piece of meat is seasoned with Cajun spices, seared in a cast-iron skillet and served with a side of browned garlic butter.

Then there are the oysters Palace ($17). I don’t know whether these originated at the famed Commander’s Palace restaurant in New Orleans, but they were good enough to qualify. The Gulf oysters are baked in the shell, in a mixture made up of mushrooms, green onions and crawfish tails, then the kitchen tops the dish with a Jalapeno beurre-blanc sauce.

Some of the dishes, especially the appetizers, can be a mixed bag. The Bahamian conch chowder ($4.75), served with a pony of sherry on the side, is made of conch (brought in from the Bahamas, I assume) simmered with Caribbean spices. Very tasty. And you’ll do equally well with the oysters Rockefeller ($8.50), which at the Palace are topped with a Cajun hollandaise sauce. But the fried oysters on my plate one evening were encased in a sodden breading that even the horseradish couldn’t overcome. And the jumbo soft-shelled crabs, as an entree (market price) are breaded much too heavily for my taste. These crabs, it seems to me, need light sauteing and not the Kentucky Colonel-like treatment the Palace gives them.

The chicken Tchoupitoulas ($11.75), chicken breast sauteed with fresh garlic and white wine and then topped with an absolutely luscious Creole tarragon choron sauce, can be just a bit overcooked.

Sponder, for reasons not evident to any Palace patron I know, puts a separate brochure on his tables touting his “team” service. You can ask any employee on the floor for service. Sounds great. What we found it to be was somewhat disorganized, and certainly less efficient than a conventional system. When I’m spending $20 a head for entrees, I’d like the waiter to find a way to remember what I ordered.

It happened one evening that one member of my serving team was benched. Unfortunately, he benched himself at our table. Without an invitation. If I want to eat with my waiter, I’ll ask him to my house, but I’d sort of like the option to be mine.

* WHERE AND WHEN

The Palace Cafe, 8 E. Cota St., Santa Barbara, 966-3133. Dinner 5:30 to 11 p.m. Saturdays through Thursdays, 5:30 p.m. to midnight Fridays. Major credit cards accepted; reservations accepted. Beer, wine and house special martini. Dinner for two, food only, $44-$80.