Thanks, all. I actually figured out about walking in by accident. I flew into an anti-dragon zone accidentally and, lucky for me, I had the transformation stone mapped to a button, so I quickly changed to human form (purely by instinct, in fact) and dropped like a stone (glad I survive high drops) and made it to Champion Harbour, etc.
I haven't met the merchant either and, from what I have heard on other forums, he doesn't appear in DKS.
Still investigating that, though.