Oh, dear, there was a note from Nikodemus (mage in Ultima?) in the guard room right in the starting level - under a stack of books in the SW corner of the room.
Sequence => drag salt over coal => coal/salt mix => then drag sulfur over it => explosives. It has to be done IN your inventory. If the DK has the stuff => the mix goes over to the char's inventory. this happens to a lot of crucial item mixtures and nearly all quest rewards.
This explosives must be put into the lava forge where you fought the smith - topmost level of the Citadel. You enter Act 2 then.
Coal barrel => Fergus room
Sulfur => a bowl on the table of the Infirmary, where the gay medic was (as you have killed him <img src="/ubbthreads/images/graemlins/winkwink.gif" alt="" /> )
Salt barrel => one level higher than the Infirmary, in the kitchen.
Some of these items require drag%drop others can be clicked on and wander into your inventory.
