Hey, some thoughts on this (not arguments for or against):
1) Alric wanted the armor because he figured it would make him the equal of Balor, who had a similar suit (this would suggest it was different armor), but gave up on that once the Eblis stone was found.
2) The armor IS Balor's armor, and the head is making a cryptic reference to Connacht's old armor, trying to point Alric in the right direction (to suggest that Balor is Connacht) but without giving the whole game away (why? who knows? The head is weird).
3) Nobody grabs the armor because it was specially made for Connacht and wouldn't fit anyone else--all plate mail in the real middle ages was custom fitted.
4) It's a completely different set of armor and it's buried in Muirthemne. It belonged to Ceiscoran (or whoever the last Emperor was) and it does, in fact, turn up. Where? Well, let's just suggest that it's red and looks more like scale mail and the Ibis Crown fits neatly under the helmet... ok, enough suggestions. Maybe it's the armor Alric wears after he becomes Emperor. (I know, there's no reference to this and it doesn't exactly make Alric invulnerable to ALL attacks--in Twice Born he can kill everything on the map except the Mahir, though, which is pretty good).
5) The armor makes you invulnerable the same way the mandrake root makes the Heron Guard "deathless" (after killing off a couple of hundred of those guys I tend to sneer when I see that--a lucky berserk can knock 'em down)--yeah, okay, you won't die of influenza, but a bunch of zerks hacking at your neck hole will eventually manage to take your head off.
6) Maybe it's all literally true--maybe this is why Balor's head survives being hacked off. Maybe all the Levellers (who seemed to require excessive and grotesque executions) wore this armor which keeps you alive even in pieces and that's why Alric doesn't bother picking it up--it turns whoever wears it into the Leveller (hah! no, I don't want to turn this into a theory!)
7) Maybe it only works as long as you keep it all together. Maybe the zerks actually just managed to knock the helmet loose--at which point the spell is broken and Balor is just a very buff training dummy.
Anyway, those are my thoughts...
