Good bug report.
However the real issue is the break down combines yielding 2 smaller portions of Velium. The classic combines only yielded 1. So instead of getting 4 small bricks out of 1 block of Velium, you would get 1 small brick.
This was changed in like GoD or later, here is a 2003 capture listing the break downs as yielding just 1 smaller brick:
https://web.archive.org/web/20030804...r=080100040000
The correct combines should be:
Block of Velium + Smithing Chisel = 1 Large Brick of Velium
Large Brick of Velium + Smithing Chisel = 1 Small Brick of Velium
The Small Brick -> Piece break down however classicly was 2 pieces.