Could you go into more detail about how the crafting and upgrading system works?
Yeah, of course.
I'll go in chronological order.
You start by finding a recipe. Recipes can be found anywhere, generally in chests, rooms, and dropped by monsters.You can take it back to the lab to be examined by Alphadin (In Game Character). He tells you the resources to make it. Next you gather the resources. They are most commonly dropped by monsters and found in chests. If you don't know where to find them you go into Nick's room and ask him. You gather the resources, bring them to Alphadin and he'll craft it using his machines. To make ingots which are used the most and are dropped rarely, you just take x2 Junk (Always dropped by enemies)
Quick Example:
You slay an enemy with a really cool sword, and it drops a recipe. You abort/finish the level and take it to Alphadin and he tells you, "This is a recipe for a really cool sword. It requires:
1 Blade of Imagination
5 Imagination Ingots
1 Heavy Blade Tip"
You don't know where to find the tip so you how downstairs and find nick. Ask him where to find the tip and he'll say, "You should be able to get the tip from the dudes carrying the really cool sword."
You go kill them and hope one of them drop the tips. You get the tip and plenty of Junk. You chat with Alphadin and exchange 10 Junk for 5 ingots. Now you craft the really cool sword.
There you go. The crafting system.