www.knightrealms.com/Components/Forums/index.php?topic=1158.0
I would refer to the link above for a full explanation, but here are the most important points.
1. OOG goods of any value can be sold during game-play at Knight Realms, so long as they are appropriate to the setting of the game; the Director has final approval on what goods are acceptable for sale.
2. OOG goods that are worth less than $10 each can be sold for OOG or IG money; the transaction must be entirely for one or the other.
3. OOG goods that are worth more than $10 each can only be sold for OOG money.
4. IG goods can only be sold for IG money.
5. If your character possesses IG items for which your OOG goods could be used as phys-reps, you can sell them together for the purpose of enhancing role-play. The IG item should be sold for IG money, while the OOG good must be sold adhering to the rules above.