Well, that's a doozy of a pickle. Just playing around in the CS with a new merchant I gave him a cuirass and a bow then set the values to -5 so he would always have 5 of each item on him for sale, and nothing happened. Also auto-calc stats, making him a blocked character or adding a script had no effect, which i thought might have been the problem. This question may have an obvious answer, but how are you altering the number of items in his inventory?