It sounds like you guys aren't understanding each other.
nugonugo has items that he does not want, but chegewara is suggesting that he should sell unwanted items at auction (or that is what is being understood) - but the system isn't allowing it.
nunonugo, have you tried selling your items at the weapon/armour or general goods stores? In the towns, there are stores that sell armour, weapons, and food/rings. These are not like the auction house.
You can drag your unwanted items into the store and you will receive money for them. This will make space in your backpack for more item (like any items that might be filling up your cache). You should be able to place any item into any store and sell it instantly (for example, you can drop weapons into the armour store). Just drop the item right on top of the other stuff that is in the store, and you will be offered a price for the item.
Does that help?