I assume this is supposed to be the way it is with triggered / scripted merchants that sleep upstairs in the middle of the night that always get up once you cross an invisible line
across the room?

I am trying to get across the room upstairs in the Gilded Carafe but that lady without fail always gets out of bed once I get past a certain spot in the room.

I have tried 25% camo with lights doused by the door, shooting dousing arrow from TA/TIC (those things need to be quieter as they make a racket waking people up) at the torch near her bed,
shooting the ground near the foot of the bed with a grease arrow (she only went down for a few sec and by the time I get to her to use my blackjack she is getting up and not affected giving me
a bounty for hitting her). When I shoot in the darkened end of the room using the 25% camo she walks RIGHT UP to me sheeesh!

I encountered a similar issue with the Red Diamond sleeping merchant. No matter what he would always suddenly get out of bed as I approached.

If its a custom merchant there is a possibility he is scripted/triggererd in some way to get up at some point if the player aproaches.

If not.. there is a possibility your sneak skill is just to low and the "standing in light" penalties aren't removed when you take care of the lights.
Could be a bug/problem with some mod that chages your light setttings or your mentioned mod itself.

Not a custom merchant that I know of. They are the standard Red Diamond and Gilded Carafe merchants in IC.
Other merchants I have come across asleep haven't done this. Just these two so far.
I eventually threw caution to the wind, ran full speed and smacked her quickly twice as she got up. She started to say something but apparently
didn't see me to give me a bounty. I just got an extra assault counter. Normally I wouldn't get an assault counter on the blackjack attack if she stayed "unaware".


edit...tried to approach the 3 brothers merchants asleep and they get up as well, exactly at a set distance from them all the time.