This trick is best done at the main menu or at a Training
Hall.
Save the game. Remove one member of your party, so you have five
remaining. Create a new character, for example "Bob",
and add him in. Remove all of his equipment.
Transfer all the equipment you want duplicated to Bob. Remove
him, and quit the game fully -- do not save.
Reload that game, and you will be back to your normal six party
members, with the items you intended to copy. Remove that character
again, and add in Bob again, and he will also have those items.
Trade those items back to the party, and your party will have
their items, and the duplicates that Bob had.
Remove Bob and add in your other members, save, and you will be
back into the game, with two sets of items.
The character duplication trick is far easier, but only if he
or she has not been in combat and can be modified. Rename your
character using the "Modify Character" command, then
remove him or her. Quit without saving, and reload. Your renamed
party member will be in the pool of characters, and your original
character will still be in the party. This is also a nice way
to gather up useful items from new characters in Dark Queen
of Krynn, where some of them receive potent magical items
not found in Death Knights of Krynn.
Strategy