It's available in 1-3, but not at once. Biorr has to be freed and survive (leave the world by himself).
- I killed Biorr after the Blue Dragon, and it never appeared in his list.
- This playthrough I left him alive. I checked with the dregling before fighting the blue dragon, and he had no brushwood set. Then I went to 1-4 and killed the dragon, talked to Biorr and went back to the dregling, and it was available for sale. I didn't even go by the nexus inbetween.
- Tried with leaving him in his cell until I opened end-game. Checked before rescue, and no armor for sale. Freed Biorr and ran straight back to merchant, and he had it for sale.
Will try without killing the dragon some other time.
This may imply that he is killed somewhere else and the Dregling Merchant picks up his gear, or it is him that kills Biorr (which is unlikely).
There's this skinny fellow, clad in fabulous armour — I'd give an arm just for the buttons off his shirt!