Well, the Tobur Xin (gods, I'm massacring that spelling - been too long since I've been in Hlint) smithy is a crafthall, actually, for making your own equipment, rather than buying it.
Perhaps you should try another town, like Leringard, Spellgard, or one of the starting towns.
As an aside, I believe that the transition was removed in the switch to V3, when the crypts and East Hlint were.
