Items are restricted to a maximum of three enchantments (four if the enchanter is at epic levels - 21 or higher).
Craft Armor and Craft Weapon with certain materials have Special Properties, these count as one enchantment. As of v1.23 of the game, in the Original Campaign, weapons and shields crafted using materials with special properties no longer count as one enchantment, but separately: one for each property granted by the material (Mithral is the sole exception - see below).
Weight reductions and reduced Arcane Spell Failure do not count as item properties on Mithral Armor, but they do on all other types of Armor, Weapons and Shields.
If the special property of an item enhances AC (e.g. an Umber Hulk Hide's +2 to AC) and the bonus to AC is further enhanced, the new higher bonus will replace the original and still count as a separate enchantment.
Existing enchantments may be upgraded; to upgrade the enchantment the item must have an empty enchantment slot available.