So it has been confirmed that on both the xbox 360 & playstation 3 versions of this game that the Blacksmith skill just flat-out doesn't work at all. It seems when they remodelled the interface for the console version they forget to add in the menu.
Check out the discussion here if you'd like: http://forum.sacredeng.ascaron-net.com/sho...ead.php?t=59908
I need someone to put a warning note on both the skills list and in the Blacksmith page about it being broken as of: 04/07/09
This is try and help protect future players of this game from wasting a skill slot.