I have found many players (myself included) get stuck in this quest where you're meant to level your legendary weapon to level 10 before continuing. Thing is, even the weapon has reached that level, the NPCs aren't recognizing the fact.
As a result, you've no access to the Legendary Weapon system, and neither Moria, which Quest Pack I recently bought at the store for a good amount of TP.
So far this issue can only be solved with the assistance of a GM; however this assistance is only restricted to VIP or subscriber members. While I understand those members should get a preferred assistance, I also believe that this situation is a result of a bug in the system and, therefore, should be able to be addressed for any player, regardless of their status.
In fact you are not meant to talk with Forge Masters (both Rivendell and Thorin's Hall ones are disabled until you gain access to Moria) but I tried the same thing with Dithalion (which is an NPC standing next to the forgemaster at Rivendell) and he also has the blue ring icon above his head, expecting me to level the weapon up to 10.
The "levelling disabled" picture was merely to clarify that the item is indeed the one you're given at the quest chain.
Apparently with other legendary items, they can still level even if not equipped as long as they're slotted in one of the legendary panels.
I added that screenshot because in some of the threads I pointed out, there was said that you must use the weapon you're given at the chain quest, and that is exactly this case.
The only forge master you can use when the volume 2 book 1 is not completed yet is the one at Eregion.
However, if I try to reforge the Legendary Item there, I get the error "You cannot use Legendary Weapons until you have access to Moria" as can be seen here: