I highly recommend Torch Modders for this infomation.

http://torchmodders.com/forums/index.php

Originally posted by steffire3:

I highly recommend Torch Modders for this infomation.

http://torchmodders.com/forums/index.php

thanks, good sir.

The site is no longer available. Thankfully, I can answer the first part of OP's question since I just found it out myself thanks to this post: https://www.torchlightfansite.com/torchlight-2-forums/torchlight-2-modding/6934-item-creation-help-post24762.html#post24762

After creating an item, you need to go into Spawn Classes and look for MERCHANT_GENERAL_INVENTORY or the specific inventory you want, and then add it as a choice on the right side.

To spawn an item in the world, you first need to load the layout file for the location, and then you need to add a Unit Spawner to the layout that spawns your given item. Finally, delete everything else in the layout and save the result as an identical path to the base game in your mod folder (MEDIA/LAYOUTS/...), but in the final folder in your mod's layout path where the original layout was, create a "MERGE" folder and then save your layout there (any custom name is fine). (If you are creating a custom map, then there is no need to delete everything else.)

Finally, to add a custom merchant, create the Monster clone of an existing merchant for them, then create a custom Spawn Class using one of the existing merchant classes as an example and add your items to it, then tie it to your merchant in Monster in the "Inventories" section, and then finally add it to the world the same way you add the Unit Spawner above.