I'll post the notes that I'm using for an alchemy system that I am building for my 'other' mod here. Part of it is based on real medieval alchemy, part of it is based on real hypothetical medieval alchemy, and part of it...isn't.
Pyrite + Fuel => Green vitriol
Green vitriol + Fuel => Rust + Oil of vitriol (liquid) (There is actually an intermediate step here called 'vitriol of mars', which is yellow, but couldn't find a good use for it)
Green vitriol + Rock salt + Fuel => Muriatic Acid (liquid)
Saltpeter + Oil of vitriol + Fuel => Aqua fortis (liquid, dissolves many metals)
Aqua Fortis + Muriatic Acid => Aqua regia (red liquid, dissolves gold)
Alcohol + Fuel => Aqua Vitae
Potash leached with water => Saltpeter
Sulfur + Saltpeter + Charcoal => Black powder
Gold + Aqua regia + Potash => Fulminating gold (the famous mistake they thought was the Philosopher's Stone, but was actually a volatile explosive. Many died. Not actually very useful, because of its instability, but interesting to note.)
(Red, blue, and white vitriol also exist, they are created by oil of vitriol combined with cobalt (red), copper (blue), and zinc (white). Couldn't find any practical reason for making them though, except for their use as dyes.)
Now comes the stuff that isn't real:
True Gold (A substance slightly heavier than gold, but is as hard as adamantine. Good for hammers. Found inside wild alchemical monsters as coins.)
True Gold + Aqua regia + Potash => Azoth (White liquid, 'essence of life')
Azoth + ? => Carmot (Philosopher's stone, reddish solid)
Carmot + ? => Azoth
Azoth + metal coins => Bluemetal coins
Carmot solution + metal coins =>Redmetal coins
Bluemetal coins cleaned => True Silver (mithril?)
Redmetal coins cleaned => True Gold
Azoth + Aqua Vitae + ? => various magical elixirs
Redmetal Coins + Potash + Eggs + various assorted organic materials (blood, fat, meat, plants, etc.) => alchemical monster spawning
Carmot + ? => ever-burning flame (magma spawning?)
The essence of the concept is to base everything on real chemistry, up until the point where mystical substances is created, but in order to begin the process of creating those substances you need an ingredient obtained from monsters (i.e. homunculi) which are, in turn, created through alchemy, which leads to a chicken-and-egg scenario that explains why we never discovered them in this world. (There may be other means of acquiring these substances, but all require some supernatural input at some point.)
For gameplay purposes, the 'real' chemicals should be available in trade when possible. Green vitriol, rust (actually useful for some explosives) and gunpowder should come in bars rather than tools (ash comes in bars, so it makes as much sense.)
Muriatic acid has also been called 'Spirits of Salt'. (It's hydrochloric acid.)
I think thermite might be good for goblins.