Firstly, to say about merging it, it is not a bug that happens in the game :)

All the equipment including weapon, head, armor, and so on can be upgraded as long as it is not equipped with the character. When you tap Equipment session, At the top of the screen, there are marks with 1, 2, 3 and below the numbers, Arabic alphabet with I, II is stated.

If you click on those preset gears and any types of equipment that are equipped with, it is unavailable to use it as an ingredient to merge or to upgrade it.