Requirements: 

You must have a level 140 character and have completed the Mondshine entrance quests. 
Speak to the Chairman of Craftsman Association in Mondshine to begin crafting! 

Getting started: 

To begin you must first purchase the Material skills, which will allow you to make materials, as well as the Armor & Weapon skills. 
To craft these items you will need to open Old Material Purses. Old Materials Purses as well as the 3 pouches (blue, yellow and red) are all dropped in Mondshine, The Chapel or The Altar of Darkness. 
Old Material Purses are the lowest grade of materials, and thus your first items will be crafted from these. 
Old Material Purses give the materials to craft only the 147 armor sets and weapons. 
More on how to get higher grade armor further on in the guide, the next section deals with how to get higher crafting skill levels. 

Levels/Pouches: 

There are three Crafting Levels: 

Craftinglevel 31 
Craftinglevel 61 
Craftinglevel 91 

From levels 1 to 31 all crafting is done using materials which come from Old Material Purses. 
From levels 31 to 60 all crafting is done using materials which come from Blue Pouches. 
From levels 61 to 90 all crafting is done using materials which come from Yellow Pouches. 
At level 91 all crafting is done using materials which come from Red Pouches. 

currently my crafting levels (13.03.2011) 

Pouches & Materials: 

Here is a wonderfull list where you can see what materials you´ll optain from all kind of Pouches 

Leveling Crafting Skills: 

When leveling your crafting skills you will go through three phases of different success rates for particular levels per each 31 level set. Let’s take the levels of 1 through 31 as an example. 
From levels 1 – 10 there is a 100% chance you will level up after crafting an item. This is depicted by orange text. 
From levels 10 to 21 there is a 75% chance you will level up after crafting an item. This is depicted by yellow text. 
From levels 21 – 31 there is a 66% chance you will level up after crafting an item. This is depicted by green text. 

These 3 phases of different success rates repeat themselves for the three 30 level sections: 1-31, 31-61, 61-91. 

This picture shows the green text, which means crafting any of these items will give you a 66% of gaining the next crafting level, in this case level 24. 

Crafting higher level gear: 

Alright, so now you’re well on your way to achieving the highest level of crafting. This is going to allow you to craft higher grade armor. What you will need is the appropriate pouch color for the particular armor / weapon level you wish to craft. 

Old material purse = 147 Armor Set / 149 Weapons (3 Catalyser = 30m gold to craft 1 item) 
Blue Pouch = 156 Armor Set / 157 Weapons (6 Catalyser = 60m gold to craft 1 item) 
Yellow Pouch = 165 Armor Set similar to Quest-Set / 165 Weapons (12 Catalyser = 120m gold to craft 1 item) 
Red Pouch= 165 Armor Set similar to Raid-Set / 165 Weapons (24 Catalyser = 240m gold to craft 1 item) 

Materials: 

As mentioned before, these pouches / purses are opened (by double clicking them in your inventory) to give raw materials. These raw materials are then processed with the material skills you bought earlier. These processed materials are then used in combination with catalyzers to create an item. 
The amount of materials you need for any particular piece of armor or weapon will vary on which piece it is. Although, they all share one unfortunate common factor – the amount of materials you require is very large. 

An example of the materials required for crafting a healer shirt is given below. 
5 Mithril = 15 Mithrill stones (Raw Material from Old purse) 
5 White crystal = 15 White crystal stone 
15 Rough leather = 45 Pieces of Rough leather 
30 Hemp Cloth = 90 Hemp 
3 Catalyser = 30 million gold (you can buy them from Grocer Mary in Mondshine) 

How many pouches needed to craft items: 

Generally, these are the amounts of pouches / purses required for: 
Gloves, Boots or Helmet ~1400-1500 
Shirt or Pants ~1600-1700 
Weapons ~1500-2000 (Heavily depending on class) 
These numbers are given as approximations because the materials you get from the pouches / purses are random when you open them. 

Seals on Crafted Armor / Weapons: 

Crafted 147 Set – Random Blue (Evasion / Defense / Fortitude) 
Crafted 156 Set – Random Blue (Evasion / Defense / Fortitude) 
Crafted 165 Set from yellow pouches – Purple 6 Seal Defense 
Crafted 165 Set from red pouches – Purple 6 Seal Double Evasion (Similar to Raid armor set seals) 
Note: for the Nightshadow armor all seals are purple except for the 145 helmet which is blue (evasion, defense or fortitude).  

Pictures at the end what has been crafted already: 

Craftings from Old Purse Material 

Craftings from Blue Pouches 

Craftings from Yellow Pouches: 

Craftings from Red Pouches: 

If you guys have ideas whats missing or what can be added, feel free to pm. 

Credits go to azid.