I am quite sure that the tattered gear rewarded by Seņor Nusback only comes in the Small size. Small armor of any sort can only be equipped by Dwarves, Gnomes, Halflings, Dark Elves, High Elves, and Wood Elves. If you quest for the armor and you are not a small-sized race, you can sure sell it to a merchant for nearly the value that it would cost you to buy the components to craft some tattered armor in a medium size, had you the Tailoring skill.
If you check the armor you received and the tag indeed says it is "Small" size, you didn't get gypped. You just got some incentive to explore tailoring, so consider it a push in a direction. It might not be the right direction, but who can say what that ever is anyway?
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[Beguiler] Vermicelli (Gnome)
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