He usually stands around the town circle outside the hospital.
|Potions (Consumables)||Reagents (Consumables)|
He can be found in Mel Senshir.
He becomes available to speak to and trade with after the "Sail to Mel Senshir" part of Breaking The Siege.
You can buy a backpack from this merchant. After you bought the backpack , you can kill him, escape the place, find a place to sleep for 4 days and when you return Illyn Doldran will be alive and his inventory reset. This glitch alows you to buy multiple backpacks from this same merchant, so that you're not stuck with a max inventory size of 130. This allows you to have enough room left in your inventory to deal with glitches that cause items to get stuck in your inventory. (I.E. building materials from the Dead Kel DLC, books, etc).
To make a speedy escape after killing Illyn Doldran you can press the "Map" button the very moment you hear the sound for a crime commited. (Done correctly and this should allow for "Fast Travel" even though there is hostile creatures around since the game should'nt have registered you as in combat yet.)
(It should be noted that Quest Items do not count against your inventory totals, only items that can be sold count against it.)