When the "bug" kicks in which only seems to happen after I die and reload, the game gets to easy..
In DKS I died a few times in a couple places and there was no automatic difficulty drop. When I did get the drop, I had returned to the menu and loaded the autosave, where I usually hit A to load a save on the death screen, then load a manual save. I don't know if that could have anything to do with it, though.
I wouldn't call Broken Valley a small part of the game, but there is another map about the same size, and a couple smaller maps. Lovis' tower is not the battle tower you can take over.
You should be able to free up some inventory space. There is also a skill to boost your capacity, if you have the points to spare. You can unlearn all your skills after getting the battle tower (at a character level in the late teens to early twenties), and get those points back once you have access to the chest there to store things. I learned that skill in the original release of D2:ED, but didn't need to in DKS, since I had a better idea of what I needed to keep, and what I didn't.
I usually kept quest related books (even if they were just added for info or atmosphere), but sold ones that show up in randomly generated loot, etc (like the different 'History of' book series). If you check the consumable section of your inventory, you may have a stat/skill book there you can use to free up some space. Any required books should be in the quest item section of your inventory, though there are a couple books which you can read yourself to get a bonus or give to someone to complete a quest. In any case, after you've read a book you can sell or destroy it (as long as it is not marked as a quest item, in which case it doesn't count towards your inventory limit).
If you have any creature parts you only need to keep the best of each type. I kept a list of my current top part stats handy so I could sell any lesser versions before talking to the necromancer (and working on the creature), so I wouldn't clutter up the part list when any new pieces I had with me were added. In DKS creature parts can also get added to the necromancer's list from any merchant's inventory, if you sell or buy anything in that section of the inventory (and maybe just switching to it).
You can get rid of potion and enchantment formula by talking to the alchemist and enchanter (any left in your inventory after going into the alchemy or enchantment functions will be duplicates, and can be sold).
Alchemy plants and enchantment gems and minerals are easy to acquire after getting the battle tower, so you can get rid of any you are not going to use. Keep malachite gems, since there is a limited supply in the game, and ginseng (etc) for healing potions, but if you have multiple stacks of the same item, you can safely get rid of the extra stacks. Iron, whisperwood and fatfern are fairly common, for example; you can make more money with the latter two if you make level 1 or 2 Full Resistance or Dexterity potions, and sell the potions rather than just the ingredients.
If you have any equipment that you are hanging onto because it might be good once you get higher level enchantments or better charms, by the time you do you will most likely also have found equipment with better base stats (my first game in the original release of D2:ED I hung onto lots of stuff I ended up just selling later).
The expansion continues seamlessly from the end of D2:ED; if you didn't play the original release or start a new level 35 character in FoV, you might not recognize the transition. FoV does contain more skills (mostly just higher levels of some of the existing skills, though), enemies (some of which respawn periodically, until you complete an associated quest) and loot, etc.
