To reach merchants, you'll have to take down the anti-dragon barrier that cuts off the rest of the fjords. It shouldn't be too hard, but you can set the difficulty down lower if you're having a real problem. Next to the giant anti-dragon zone, there's one up on the side of a cliff. To get inside, you'll need to stop at one of the cliffs you can reach and take the teleporter there. You'll end up inside the anti-dragon zone and can climb up the ladder to kill the two Black Ring generals waiting there, and once you've done that, you can go upstairs and pull the lever to open up the fjords. There are merchants in Dragon Cliff Castle, just beyond the anti-dragon barrier you'll deactivate, and you can drop through the permanent anti-dragon barrier over Champion Harbor to find merchants there.
Also your platforms and throne room should each have a locked chest, except for the Alchemy platform which has a key that lets you unlock one of the other chests, which will have a key that unlocks another chest, and so on--if you save before you open a chest, the loot is randomized each time, so you could see if you can find a decent two-handed weapon in one of the chests by reloading if you don't find one.
