There are a whole bunch of different types of items in Everhood 2, just like a regular old RPG. Some of them are more useful than others. Expect this guide to contain spoilers and to be fairly incomplete. Any suggestions or additions for things that I missed are welcome!

Much information was obtained from commenters, thank you very much TorchFour, bryce105212 and others.

The Talisman is basically an accessory item. They are obtained infrequently. Some can be missed.

Stopwatch

The first Talisman item obtained; probably impossible to miss. Prevents you from dying every 130 seconds in a fight unless health regeneration is disabled.







Red Bandana

An item obtained in Year 0, located in the chest just north of where you fight Chase the chameleon. Can be missed if you go straight through the next door. It provides 15% more damage on every attack, but this damage is lost if you get hit once during a fight. Very useful if you're trying to get one-hit achievements. Does not prevent death. I am not certain about this but you can probably get this again if you reach the end of the time dilation storyline and loop back around.





Bead Bracelet

An item obtained from Hansma on Earth where you may be sent if you lose to the Dragon. You're always sent here if you go through the Vegetable Kingdom and possibly Year 0 before fighting the Dragon. Requires you to be a kind spirit (chasing the dog with the old man's leg and not dropping the lamp on the guitarist). It provides a 15% 20% after update bonus to attacks using Wisdom (purple) and prevents death every 90 seconds in a fight unless health regeneration is disabled.





Duality

An item obtained from Lucy after winning the first (?) fight after being invited to her hotel room. It prevents death twice in a row, with each charge regenerating after 200 seconds.

There are two more Talisman slots I haven't found yet.

The methods of acquisition for the various weapons change based on your soul color. If you're blue, you will get the Moon Blades first from beating the Dragon for the first time, the Spear of Destiny from the Light Being in the Sludge, and the Ragnarok Axe from the aliens in the time dilation. You can get the weapon from the time dilation early if you survive the bullet hell with the God Machine in Year 2000. If your soul color is red, these rotate around - the Axe comes from the Dragon, etc.

Unarmed

The default weapon. It can be upgraded with power gems to gain armor break on medium attacks and additional damage. Levels up to 3.





Moon Blades

Does more Wisdom (blue) damage, but less Intelligence (brown) damage. The third upgrade removes the Intelligence weakness and increases damage. Levels up to 6.





Spear of Destiny

Does more Perception (green) damage but less Wisdom damage. The first upgrade unlocks the heavy cast. Levels up to 6.





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Ragnarok Axe

Does more red damage, less ??? damage. Still not certain on the specifics. Levels up to 6.


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World Ender Katana

Obtained from the lab in the pocket dimension/after losing to the Dragon several times. It is found after completing a slide puzzle through a mess of wires/intestines. Does more Wisdom (purple) damage. The first upgrade improves the Light cast and increases damage by 10%, the second upgrade adds Life Steal to the Medium cast and increases damage by 10%.

This slot exists just for story purposes so you know who's in your party. It's either empty, or...

Riley

A frog interested in the Boatman.

Most of these items are consumable.

Druffle
A non-edible mushroom that can be used as a currency.
Seeming only use is to be sold to Heidi in the 10,000 Club for Schmuckles. Dropped by Spring Head in the Neon Jungle.

Schmuckles
A currency that is always good to have around!
An infrequently used currency, You will probably never need more than 400.

MacDaller
A highly valued, but ultimately worthless currency.
Sold by Bobo when first seeing him. Used for selling back to the shady guy in the alley for Schmuckles.

Power Gem
A gem that can be used to upgrade yourself in the Character tab.
Found all over the place in various hard to reach locations, it's used to upgrade weapons.

Tomato Seed
Eating tomato seeds gives you one XP.
You can get a limitless amount of these in the Vegetable Kingdom and theoretically level up forever with them. Why would you, though?

Spirit Flower
Found on Earth in the woods by interacting with clumps of purple flowers. Doesn't do anything?

Catnip
Some cats like it, some cats don't. Stimuli enhancing properties
Found in Irvine's mailbox. No clue what it does.

Death Coin
A coin that can be used to pay for a passage.
Technically a quest item but acts like a consumable. Allows you to take additional party members with you when traveling with the Boatman. If you fail to complete a trip for whatever reason, your coins are refunded.