Sorry for the late reply - I have a bad habit of posting in threads and just never following up with comments haha.
You are correct in your presumption that I never did the first half of the quest (buying the oil, etc, etc) and skipped straight to just having the powder. I'm betting that initial quest is supposed to put you in the sweet spot for faction (high indifference?) so that Kandin will reply to you. As a chronically low on plat individual I did the route of questing peg-leg over again
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I am also a human/inny worshiper so that might have had something to do with my initial TS faction setting. From my recollection this was initially at apprehensive.