Did you load an earlier save (if available), at least to help determine if the problem is with the current save or the game itself?
You could send all your equipment to the battle tower, then teleport there, retrieve some of it from the chest, and try the enchantment machine again. Save first; if that doesn't get the game to recognize the equipment in your inventory, it would probably be easier to reload than retrieve everything from the chest.
Try emailing email@example.com, with a description of the problem and maybe a link to this topic. See the DKS support page
In XP the saves are in the folder
C:\Documents and Settings\ %username% \Local Settings\Application Data\Divinity 2\Savegames
or in Vista / Win 7
C:\Users\ %username% \AppData\Local\Divinity 2\Savegames
You may need to set Windows Explorer to show hidden files and folders (XP, Vista
, Win 7