you cant sell to merchants in this game, the only way of actually selling items is waiting until you meet a big ugly looking head/face thing, as part of the main story, you can feed him items and receive souls for them. you can also feed him special items,
not sure what that does.
you can carry infinite amount of items, and i dont think its that far into the game, the guy i saw feeding him items was getting 100 souls per short sword, and you could get like 5000 for some rarer weapons.
Don't forget, some odd items you come across can be traded to Snuggly the Crow, in the Northern Undead Asylum (right after the tutorial). You'll be able to go back to him later in the game. There are always a few valuable and rare items that can be obtained
from trading with the Crow.
When you get back to the undead asylum walk down and keep your eyes to the left. You'll see his nest. To trade, drop an item in the nest and save/quit. When you reload the game your new item will be in its place.