It's A Cauldron of Endless Bog Water. The merchant lost it a while back and came here to retrieve it after tales spread of a new swamp popping up out of nowhere.

I bet someone has compiled a list of common video game tropes people try to bring into tabletop games. "Expecting a merchant to buy the blood soaked armor without questions" would definitely be on there.

What’s the flow rate of that cauldron if emptied or placed upside down? Based on your answer could become a quest or quest item in a campaign

[me trying to sell stuff in my yard] [I live in a swamp]

As always, it works at the Speed of Plot. Which somehow becomes much slower the second players come up with a use for an infinite source of unclean water.

Thankfully in PF2E, PC's only get half of most item's value when selling to merchants RAW. I like to use this as an explanation, especially to new players

Secondary Sign reads "change my mind".

Even the man is pea soup! And his name? Abraham Lincoln.

Or she employs the old 'secretly give them a gold eating coin' trick. Momentary gain for eternal torment.

What is half the value of "a leather jerkin, soaked and blood and gut-juice, with two arrow sized holes and one axe sized hole"? Zero? Or perhaps a negative value because having it makes the owner look guilty of murder? I think I had a dm once say like "the armor didn't work for the last bloke, why would I want it?"

I had to explain to one of my players once why no merchant was going to buy the dirty loincloths he was undressing dead goblins of; really didn't think that needed explaining

You misspelled it but it is.

If it's composite armor like a lamellar, coat of plates, or brigandine it can be disassembled for the plates and reassembled. Making iron plates was rather expensive for most of the Middle Ages. And if it's chainmail, you just shake it until all the crud and rust is rubbed off and patch the holes. Plate would be significantly harder to get back to original condition from damage and cloth armor and padding such as gambesons would be a lost causr