Shout "Oh look: a distraction!" while pointing behind the shopkeeper. Knock him out when he turns around.
"Hey, whouldja look at that!" you yell, pointing off into the distance. The elf swivels around, searching. You draw your chisel and wind up with all your might when you realize something: this guy is like four times bigger than you. If anything, you'd just piss him off and draw more attention to yourself.
"What? What'd I miss?"
"Oh... it was a, eh... pixie or something. I dunno, it's gone now."
I'm not sure we can get away with stealing that, but a famous adventurer-bard-gnome with a harpsichord is a funny thought.
>Try to barter for the harpsicord with our coppers by making up a depressing sob story about ourselves and how we desperately need an instrument to fulfill our father's dying wish: To play music for the orphans of the world, making their lives slightly better.
Surveying the stall, you reckon that this thievery business might be a little demanding of you at present and begin to consider an alternative.
"Well, you see... me father, he was a simple mason-gnome, a poor immigrant from Detroggard. Ol'... Blarney-legs we called 'im-"
"Why would they call him that?"
"That's not the point. You see, Blarney had been cursed by a vindictive warlock with eternal indigestion and the only way for himself to dispel such an affliction was to play fine music for the little orphan-gnomes."
"Ooh, and you want to trade the harpsichord to save your father? How noble!" The elf is just eating it up.
"No, he's dead, lemme finish," you say as the elf's face drops. "On his deathbed, heaved over in death-cramps he uttered his one last wish to me... he... he wanted me to finish his quest to play beautiful music and entertain all the little gnomes. Please sir, I'll trade you all I've got..."
"Well, I understand you might be a little short on cash, so I'll be lenient with the trade. What have you got for one of these wonderful instruments?" he replies, moved somewhat by your story.
"... six copper"
"You're joking. I can't buy a slice of bread with that. What else have you got to trade?"
Thinking back, even if you offered him the contents of your pack and cleaned everything out of your hovel, it would only barely cover the cost. And that's if he wanted this garbage. Just then, the assistant returns from the merchant ship, panting and wheezing, his age obviously hindering his hauling ability.
"What else ya got?" the assistant sputters, leaning for support on the shakey tent leg.
"Just these instruments and the tent, if the gnome won't buy them. So how about it gnome?"
You contemplate the situation... what shall you do next?