The whole dulcimer project was put on hold as my wife sadly passed away unexpectedly at a young age. As you can imagine I lost interest.The luthier seemed super defensive and I just couldn't deal with all that at the time. It's been over a year and I'm ready to deal with this again
Quite understandable, you have my sympathies. I still think that the cost of the dulcimers should reflect in their playability.If the fret pattern is wrong or there are other reasons for it I would expect the builder to fix these issues or get the cash back, especially if you spent over 1000 bucks on it.
I'm not sure about the legal warranty period in your country. Here in Germany we have two years for new product from supplier.
In any case: I would try this: Ask two other builders for their opinion on the instrument and it's fret positioning and general playing. Ask them for a offer to fix the issues. Then go to the builder and ask him for an explaination and what he could offer to you.
You can do a first check yourself using following a fret calculator: https://www.thekimerers.net/brian/YAFCalc/YAFCalc.html
Best regards, Jost.