So glad you're enjoying the game! The colors indicate the worth of the item, in order from white being the least, grey, blue, green, yellow, gold. What items aren't you able to equip - are they something that would need you to get a certain skill to use? Or, the item that you're trying to replace with a new item - did it up your statistics, so without it you have less than what would be required to use the new item?
"How could drops of water know themselves to be a river? Yet the river flows on."
- Antoine de Saint-Exupéry