Currently on level 2 with a custom class. I made sure to allow the use of heavy armor during character creation. But even when I find LIGHT armor (steel or silver for example) It gives me the "You are not allowed to equip this" message. Oddly enough I'm wearing a steel piece with AC 2, but if I try to equip a brand new steel cuirass with AC 4 it tells me I can't.

Is my game bugged? Not sure what to do about this.

I solved my issue but not sure exactly how.

I unequipped ALL my gear and was able to equip the better armor. But I'm still unsure what was preventing me in the first place.

I recall there being an item found relatively early which changes your class equipment restrictions. Cloak of Transmorph, perhaps?


(Spoiler-ish text below.)
There's some plot from a ghost about the traitor using a special Transmorph spell to change their appearance, but I didn't find any additional dialogue while wearing the cloak. Perhaps others may have some luck.